| Tue 10 Jul 2012, 12:30 | | Sanyati Holdings Ltd - The termination of business rescue proceedings commencement of liquidation of SCE&C and resignation of director |
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SAN
The termination of business rescue proceedings, commencement of liquidation of SCE&C and resignation of director
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')
Application for the termination of business rescue proceedings, commencement of the
liquidation of SCE&C and resignation of director of Sanyati
1. Application for the termination of business rescue proceedings and the liquidation
of Sanyati Civil Engineering and Construction Proprietary Limited ('SCE&C')
Sanyati shareholders ('Shareholders') attention is drawn to the announcement
on SENS on Friday, 22 June 2012, whereby Shareholders were advised that the
first meetings ('Meetings') of creditors and employees and employee
representatives of Sanyati and SCE&C, as required in terms of the business
rescue proceedings detailed in Chapter 6 of the Companies Act, No. 71 of 2008,
as amended ('the Act'), took place as scheduled on Wednesday, 20 June 2012.
At the Meetings, Mr Trevor Murgatroyd, the appointed business rescue
practitioner to both the Group and SCE&C (collectively 'the Business'), had
advised the attendees of the Meetings, inter alia, that he believed that it was clear
that the current basis of operation of the Business was not sustainable without a
substantial capital injection and that if the Business was left as it was it would
continue on a spiral to its eventual demise. The only reasonable prospect of
rescuing the Business was an overall restructuring, which would include a
combination of rationalising expenses, ringfencing viable projects, disposal of
parts of the Business, disposal of certain contracts, entering into of joint ventures
in respect of certain contracts, cancellation of unviable contracts and raising of
capital. The prospect of rescuing the Business was highly dependent on the
successful raising of emergency funding to enable the Business to continue
operating during the period of the business rescue proceedings.
In order to allow time to implement the conceptual plan it was imperative that
critical operational expenses of SCE&C were paid to preserve what remained of
the Business. The absolute minimum critical short-term cash flow requirements to
ensure the survival of the Business until the consideration of a business rescue
plan amounted to approximately R32 million. This did not take account of the
requirements after that date.
SCE&C had experienced financial distress for some time prior to the
commencement of the business rescue proceedings, leading to many of its
ongoing projects coming to a standstill and experiencing delays. As a result of the
delays experienced prior to the commencement of the business rescue
proceedings and which continued during the business rescue proceedings, many
of the contracts were terminated by the respective clients. The order book has,
therefore, decreased at a rate and by amounts far in excess of what was
anticipated at commencement of business rescue proceedings or when initial
views as to the viability of the Business were provided.
SCE&C has continued to report trading losses for the first three months of the
financial year. From the information presented to the business rescue practitioner
it is evident that SCE&C is in fact insolvent in that its liabilities exceed its assets.
The Business is no longer able to continue operating as it can no longer meet its
critical payment commitments. Under the circumstances, SCE&C is factually and
commercially insolvent and is clearly no longer able to trade without independent
financial assistance and unable to pay its debts.
Mr Murgatroyd held a meeting with certain of the remaining directors of SCE&C
and Sanyati on Wednesday, 4 July 2012 during which his views were relayed to
them. The directors concurred with his view that:
- there no longer exists a reasonable prospect of rescue;
- steps ought to be taken to terminate the business rescue proceedings in
respect of SCE&C; and
- steps ought to be taken to apply for the liquidation of SCE&C.
Sanyati will remain under business rescue proceedings for the time being.
Subsequent to this meeting, Mr Murgatroyd has submitted a founding affidavit in
the South Gauteng High Court on 09 July 2012 to effect the decisions above.
2. Resignation of director
In compliance with section 3.59 of the Listings Requirements of the JSE Limited,
Shareholders are advised that Ms Al??ta Jovner, Chief Financial Officer and
Financial Director of the Company, has resigned with effect from 6 July 2012.
3. Voluntary Suspension and cautionary
The voluntary suspension of the Company's shares remains in place and
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
10 July 2012
Sponsor
KPMG Services (Pty) Ltd
Date: 10/07/2012 12:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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