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One of South Africa’s longest business rescue processes has come to an end, with creditors of erstwhile construction champion Group Five in line to receive full payment.This follows the decision by business rescue practitioners Dave Lake and Peter van den Steen of Metis Strategic Advisors, who on Tuesday issued a formal termination of the proceedings that began in March 2019.At the time, Lake and Van den Steen were faced with R7bn in creditor and contingent exposures and more than 2,300 creditors. The insolvency experts also had to consider the interests of the group’s 6,000 employees and the more than 100 active projects the company had committed to before going bust.The business rescue practitioners said they had managed to save jobs, pay creditors in full and deliver a surplus return to shareholders once all residual matters have been finalised.“This outcome materially exceeds the liquidation alternative that was modelled at the commencement of business rescue,” Lake said. “The process has overachieved in its primary objectives: maximising recoveries for creditors and lenders, saving jobs and business entities, settling tax obligations, likely unlocking some value for shareholders, and stabilising and restructuring a highly complex group in an orderly manner,” he said.“Our mandate under the Companies Act was to deliver a better outcome than liquidation, and to do so in a manner that balances the rights and interests of all relevant stakeholders. That meant protecting value where it was sustainable, safeguarding employment where viable, and ensuring that the broader economic ecosystem was not destabilised.” Group Five delisted from the JSE six years ago, ending more than 40 years as a publicly traded company. Its fate is now in the hands of an interim board of directors that is tasked with overseeing all financial and administrative matters that remain unresolved.At the commencement of business rescue, the group comprised 179 companies (85 international and 94 local). Currently, 54 companies remain (31 international and 23 local). “Key subsidiaries, including Intertoll Europe and Everite, were sold as going concerns, rather than being forced into closure, with proceeds materially exceeding all pre-business-rescue value expectations,” the business rescue practitioners said.“A central outcome of the process was the protection of jobs wherever possible. At the commencement of business rescue, the group employed about 5,862 people. Fewer than 15% of those employees were retrenched over the past six years. “In many cases, employees transitioned with businesses that were sold, allowing operations and livelihoods to continue under new ownership beyond the restructuring itself.”Fewer than 15% of those employees were retrenched over the past six years. — Business rescue practitionersAt its peak as a listed company, Group Five’s share price reached R74 per share in 2007 ahead of the 2010 Fifa World Cup construction boom, which saw it awarded lucrative contracts. This had fallen to 89c when its trading was suspended on the JSE.The company is expected to enter a final phase of selling some non-core assets and resolving outstanding tax and other legal issues.“The conclusion of business rescue marks an important milestone for Group Five,” said CFO Anthony Clacher. “Our focus during the finalisation phase, post-business rescue, is on responsibly concluding the remaining matters, maintaining appropriate oversight, and ensuring that all residual obligations are managed prudently on behalf of stakeholders.”
