Loss-making construction firm Group Five attracts interest

14 December 2018 - 08:47 By Reuters
Group Five head office
Group Five head office
Image: Google maps

Loss-making South African construction firm Group Five Ltd has received interest from a number of parties for various parts of its business as it explores selling some assets, it said on Thursday.

Group Five's board is considering the approaches, said the company, which this week hired a new chief financial officer with experience of restructuring and asset sales.

The company, whose shares have lost nearly all their value this year, has been cutting jobs and closing loss-making divisions amid stagnant economic growth and low public infrastructure spending.

Group Five's share price leapt 100 percent on the announcement, before falling back to trade 8.33 percent higher at 2.6 rand at 0736 GMT.

In October, Group Five posted a full-year operating loss of 1.4 billion rand compared with a 718 million rand loss the previous year, due to higher costs from the delayed Kpone power project in Ghana.

The company's shares plunged by more than 40 percent last week after a customer filed a $60 million compensation claim related to Kpone.

The group has said previously it was selling some assets and reducing stakes in joint ventures to pay off debt.

In October, Group Five said it had received interest for its reinforcing steel business, Barnes Reinforcing Industries.

It is also partially disposing of its investment in service concessions assets in eastern Europe.

Last year, Group Five let a 1.6 billion rand ($114 million) offer from Greenbay Properties for some of its assets lapse, saying the offer undervalued its assets compared with possible rival bids. ($1 = 14.1179 rand) 

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