Lenders unwilling to provide more funding lead to Group Five's appeal for business rescue.
Struggling construction company Group Five has succumbed to a depressed construction market in which major projects have failed to materialise owing to the state’s strained finances.
According to a statement released on Tuesday, the Group has already asked the JSE to suspend trading in its stock and is now filing for business rescue.
Group Five and its subsidiary G5 Construction has appointed David Lake and Peer van den Steen of Metis Corporate Advisory as their business rescue practitioners.
Staff are being retrenched and the group will most likely have to fork out “a significant amount of severance pay”.
A consortium of lenders, which gave bridge funding worth R650 million in April 2018, has declined the company’s request for more bridge funding.
The Group said that its financial constraints have worsened after lenders called on guarantees of $62.7 million (about R895 million) in November last year, and for $43.8 million in December, relating to its disastrous Kpone power-plant project in Ghana.
The company announced that it is now in “financial distress” as it is unable to pay all of its debts due within the next six months.