| Mon 4 Jun 2012, 17:19 | | SAN - Sanyati Holdings Limited - Business rescue application and renewal of |
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SAN
SAN
SAN - Sanyati Holdings Limited - Business rescue application and renewal of
cautionary announcement
Sanyati Holdings Limited
Incorporated in the Republic of South Africa
Registration number: 1988/002538/06
Share code: SAN
ISIN code: ZAE000081055
("Sanyati" or "the Company")
Business rescue application and renewal of cautionary announcement
1. Introduction
The board of directors ("Board") of Sanyati would like to draw
shareholders attention to the announcements that were published on SENS
on 10 May and 23 May 2012, respectively, in which the shareholders were
advised that the Company`s liquidity has been impacted by long
outstanding and significant payments owing from certain government
clients and that it is currently in negotiations aimed at securing the
necessary short-term and long-term funding requirements in order to
overcome these difficulties.
2. Update on the situation
The discussions and negotiations to date regarding potential funding
solutions have included Sanyati`s bankers, major shareholders, asset-
based finance providers, potential private investors and development
finance institutions.
The most material amount owing is R43 million in respect of the Free
State Provincial Government regarding the rehabilitation of 15kms of
road between Harrismith and Oliviershoek. This project was awarded to
Sanyati in April 2010 with the bulk of project costs incurred by
October 2010. Despite the many assurances over many months by officials
within the Free State Government that this amount would be paid, the
amount remains outstanding at today`s date. The situation has been
exacerbated by the obligation of Sanyati to incur significant monthly
traffic accommodation costs on this incomplete road project in order to
protect its contractual rights with regards to the amount outstanding.
Sanyati, together with a number of other similarly affected
contractors, was finally invited to meet with officials from the Free
State Government on 31 May 2012 in an attempt to negotiate and resolve
this matter. The meeting was inconclusive and did not provide any clear
indication as to when and how this matter will be resolved.
Other long outstanding payments owing include three separate local
government matters in KwaZulu-Natal (aggregate value in excess of R30
million) and the residue of the amount owing since December 2011 in
respect of the Limpopo Government (R6 million).
The aggregate of the amounts, mentioned above, constitutes 25% of the
debtors` book as at 29 February 2012 and as a result of the age of
these debtors, no longer qualifies for short term financing in terms of
the overdraft facility agreement in place.
Notwithstanding the above, Sanyati has, over the last twelve to
eighteen months continued to focus on building an order book and
platform of opportunities in strategically identified markets that
exclude traditional unattractive markets such as domestic roads. The
order book at 29 February 2012 (for execution in the year ending
February 2013) was in excess of R1.2 billion. Significant market
segments included R327 million in mining infrastructure, R230 million
in the energy sector, R309 million in water projects, R117 million in
rail infrastructure and R163 million in the telecoms market.
The severity of the liquidity problem however continues to negatively
impact on Sanyati`s ability to execute this order book. Insufficient
working capital has brought about low activity levels on the Company`s
various site operations with inevitable deteriorating margins and
inability to achieve project milestones.
We have therefore recently commenced discussions with potential joint
venture partners in our efforts to retain and execute the existing
order book. Joint venture partners will be expected to provide the
necessary working capital in return for an agreed share of the
underlying margin achieved on execution of the project.
The overall objective is to find optimal solutions to meet the needs of
Sanyati`s stakeholders (i.e staff, creditors and subcontractors and
shareholders).
3 Resolutions to begin business rescue proceedings
The Board of Sanyati is of the view that both the Company and its
wholly-owned subsidiary, Sanyati Civil Engineering and Construction
Proprietary Limited ("SCE&C"), are currently financially distressed, as
contemplated in Chapter 6 of the Companies Act, 71 of 2008 ("the
Companies Act"), as amended. The Board is further of the view that
there appears to be a reasonable prospect of rescuing both the Company
and SCE&C from their current difficulties and is in the process of
preparing a comprehensive business rescue plan ("Business Rescue Plan")
in conjunction with professional advisors. The executive directors are
in negotiations in an effort to secure external funding and bring about
the success of the above mentioned Business Rescue Plan.
Based on this, the Board resolved on Tuesday, 29 May 2012, that both
the Company and SCE&C begin business rescue proceedings and be placed
under supervision in terms of Section 129 of the Companies Act
("Resolutions"). The Board believes that the implementation of business
rescue proceedings will afford the executive directors the opportunity
to develop and implement the Business Rescue Plan in a manner that will
optimise the likelihood of the Company and SCE&E continuing in
existence as going concerns.
4. Filing of the Resolutions
The Resolutions were filed with the Companies and Intellectual Property
Commission on Wednesday, 30 May 2012 and the effective date of
commencement of the business rescue proceedings is confirmed as
Wednesday, 30 May 2012, in accordance with Section 132 (1)(a)(i) of the
Companies Act.
5. Appointment of a business rescue practitioner
Both Sanyati and SCE&C have appointed Mr Trevor Murgatroyd as their
business rescue practitioner on Tuesday, 29 May 2012 and he duly
accepted the appointment on Tuesday, 29 May 2012.
6. Notice of the Resolutions
The Company and SCE&C are in the process of giving notice of the
Resolutions and their effective dates, in the prescribed manner to
every affected person ("Notice"). Such Notice includes copies of the
Resolutions, sworn statements of the facts relevant to the grounds on
which the Resolutions were founded in terms of Section 129(3)(a) of the
Companies Act and the notice of appointment of a business rescue
practitioner.
Copies of the Notice may be obtained from the Company on e-mail
admin@sanyati.co.za or on the website: www.sanyati.co.za
7. Renewal of cautionary announcement
Sanyati requested that the shares be voluntary suspended on the JSE
effective 23 May 2012 and the Board has requested that the suspension
remains in place. Further, as a result of the auditors not being able
to complete the audit for the year ended 29 February 2012 based on
recent developments, it is possible that the results, that had to be
released by no later than 31 May 2012, will not be finalised before 30
June 2012. Sanyati is in communication with the JSE and shareholders
will be updated every six weeks, or earlier if required, on any
developments pertaining to the future of the Company.
Shareholders are advised to continue to exercise caution when dealing
in the Company`s securities until further information with regards to
the above is provided.
Bryanston
4 June 2012
Sponsor
KPMG Services Proprietary
Limited
Date: 04/06/2012 17:19:00 Produced by the JSE SENS Department.
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