JSE-listed engineering and contracting group Murray & Roberts (M&R) has advised that creditors will vote on the business rescue plan for M&R Limited on April 8.

The plan was published on March 31, after the group entered its M&R Limited and electrical and renewable energy contracting division OptiPower into business rescue in November 2024.

M&R had been facing a declining liquidity position following losses in OptiPower, as well as descoping of a contract it had at the Venetia diamond mine – which comprised 50% of the South African Cementation business.

However, the group had been struggling with liquidity challenges for some time following the impact of Covid-19, particularly on the company’s Australian businesses.

During July 2024, OptiPower started to experience cash flow constraints, which resulted in project delays and consequential increased costs, and ultimately in an estimated R310-million cash funding requirement as at November 22, 2024, which had a knock-on effect on the group.

Given the uncertainty on the company’s short-term cashflow, the board decided it best to start a business rescue process to sustainably restore M&R Limited.

The plan involves disposing of noncore assets to meet the group’s obligations to a consortium of four South African banks – which total R409-million due by January 31, 2026 – and to restore liquidity. The group had been conducting its business in South Africa with restricted working capital facilities for some time.

M&R’s core assets by value and earnings, which include its underground mining businesses, continue to operate as going concerns.

For the business rescue plan to be adopted, it must be supported by the holders of more than 75% of the creditors’ voting interests that were voted, and the votes in support of the plan must include at least 50% of the independent creditors’ voting interests, if any, that were voted. No shareholder is required to vote on the plan, since the plan does not alter the rights of the holders of any class of the company’s shares.

The business rescue plan mulls selling off M&R’s Americas mining companies which are held through MRUK and include Cementation Canada and US businesses.

The plan also envisions the disposal of Terra Nova Technologies, which provide materials handling systems solutions, consulting services and general contracting to the mining industries of North and South America, as well as TCCA, which holds the Cementation South Africa and residual Africa mining businesses.

The business rescue practitioners (BRPs) have received and accepted an offer from differential investors to buy the company’s MRUK and TCCA assets for a combined consideration of R1.3-billion.

The plan aims to restructure M&R Limited, as the holding company, in terms of affairs, business, property, debt and other liabilities in a manner that maximises the likelihood of the company continuing in existence on a solvent basis or at least results in better returns for the company’s creditors than would result from the immediate liquidation of the company.

The BRPs have since November last year curtailed costs within the company, particularly in the OptiPower division, to limit continued drain on the company’s liquidity position. Where OptiPower projects are continuing, the BRPs will endeavour to continue with such projects only if the costs thereof are paid in full by the clients and/or joint venture partners of such projects.

The business rescue plan states that the BRPs intend to start with a companywide, large-scale retrenchment process in terms of Section 189 of the Labour Relations Act.

Notably, the BRPs have not cancelled any of the company’s obligations in terms of contracts, but reserve the right to do so.