Basil Read CEO K2 Mapasa told Moneyweb on Wednesday the debt standstill negotiated with six of its creditors would give the embattled construction group room to execute its turnaround strategy.
In terms of its agreement with Aluwani Capital Partners, Credit Guarantee Insurance Corporation (CGIC), the Industrial Development Corporation (IDC), Investec Bank, Lombard Insurance Company and Standard Chartered Bank, Basil Read will get a payment holiday for 18 months ending May 31 2019.
During this period it will be required to maintain interest payments on loans totalling about R380 million, but need not maintain the capital repayments, Mapasa told Moneyweb.
He said this measure, together with the bridging loan Basil Read obtained from the IDC, will see it through to the planned rights offer that should be finalised by the end of May next year.
The proceeds of the R300 million rights offer will be used to pay off the bridging loan first and then to fund working capital.
Moneyweb reported in August that Basil Read recorded an operating loss of R458.8 million for the six months ended June 30, compared to R73.5 million operating profit for the six months ended June 30 2016. The net loss amounted to R474.1 million compared to a net profit of R34.4 million in the first six months of 2016.
Its headline loss per share amounted to 295.16c, compared to headline earnings per share of 53.39c in the comparative period.
At that stage the group announced the rights offer as part of a funding plan to ease “critically tight” liquidity, stabilise the group and fund operations. Mapasa said on Wednesday the conclusion of the agreement with the six lenders was a relief as it will “take us to the rights offer”.
He said that despite the current market challenges, the group has a healthy order book. At the end of June, it stood at R10.7 billion compared to annual revenue of R2.3 billion.
Basil Read is on track to recover from its current challenges, he said.
By late afternoon on Wednesday no shares were traded in Basil Read and the share price was therefore unchanged at 74c each. The share has lost 67% of its value in the year-to-date.