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BASIL READ HOLDINGS LIMITED - Update to the Basil Read Limited Business Rescue Plan

Release Date: 27/02/2019 11:00
Code(s): BSR     PDF:  
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Update to the Basil Read Limited Business Rescue Plan

Basil Read Holdings Limited
Incorporated in the Republic of South Africa
Registration Number 1984/007758/06
Share Code: BSR ISIN: ZAE 000029781
(“Basil Read Holdings” or “the company”)

UPDATE TO THE BASIL READ LIMITED BUSINESS RESCUE PLAN

Shareholders are referred to the announcements previously
released on SENS regarding the Basil Read Limited Business
Rescue proceedings and are advised that the Business Rescue
Plan is in the process of being implemented.

Given that the Business Rescue proceedings of Basil Read
Limited have not been concluded within three months of the
commencement thereof the Business Rescue Practitioners
publish a monthly update report in terms of section 132(3)(a)
of the Companies Act 71 of 2008 (“Companies Act”). The First,
Second, Third and Fourth such Update Reports are available on
www.matusonsassociates.co.za/basilread/    along   with   the
Business Rescue Plan and these Update Reports should be read
in conjunction with the Business Rescue Plan.

The Fourth Update Report dated January 2019, provided
significant developments relating to the following:

1.   The majority of the construction contracts that the
     Company had at the commencement of the Business Rescue
     proceedings have either been completed or have been
     terminated;
2.   Significant reduction of overhead and head office costs
     through accelerating retrenchments as well as the
     reduction of the number of members on the board of
     directors

These significant developments have also been accompanied by
some challenges, which include the following:
  • Resolution and payment of contract claims remains a
     challenge and the process is taking longer than
     anticipated;
  •   while the acceleration of retrenchments has assisted in
      reducing the cost base, its timing has impacted
      availability of resources;
  •   insufficient    post-commencement     finance    (“PCF”)
      resulting   in   the   Business   Rescue   Practitioners
      requesting the lenders to provide further PCF, in order
      to realise the objectives of the Business Rescue
      Proceedings;
  •   many pre-commencement creditors have yet to submit their
      claims;
  •   there has been some interest in the purchase of non-core
      assets but few committed buyers; and

unforeseen setbacks severely impacting the cashflow estimated
at the commencement of the Business Rescue process and further
delaying the finalisation of the financial statements.
The above listed challenges have increased the liquidity
constraints on the business.

The Business Rescue Plan contemplated that the PCF is to be
repaid from the proceeds of the disposal of non-core assets
of the group and resolutions of claims. As per the latest
update of the Business Rescue Plan the realization of assets
and claims have been significantly delayed. Notwithstanding
such delay, the Company has approved the disposal of a 28%
interest in the Majwe Mining Joint Venture (Pty) Limited by
one of its subsidiaries (the “Disposal”). The Disposal would
be the first of such transactions and the proceeds thereof
are anticipated to be utilised first as working capital for
the mining business and then towards the repayment of the PCF
in order to improve the outcome of the Business Rescue Plan.

The Business Rescue Practitioners have also requested
bridging finance and advised that provided that the requested
bridging finance is obtained without delay, they consider
that there remains a reasonable prospect of a successful
Business Rescue.

As a result of these challenges, the Business Rescue
Practitioners are focusing on the following key elements of
the Business Rescue Plan:

  •   Completion of the profitable construction contracts;
  •   Cancellation and/or cession of onerous contracts;
  •   Resolution and recovery of outstanding claims;
  •   Disposal of non-core assets;
  •   Reduction of fixed overheads; and
  •   Reduction of labour costs.

Although the Business Rescue Practitioners remain of the
opinion that there is a reasonable prospect of achieving an
end result that would be better than that of a liquidation,
the further initiatives being considered may result in a
material variation to the Business Rescue Plan previously
approved by Creditors which may require further creditor
approval.

Further updates on the Business Rescue proceedings will be
provided in due course.

Boksburg
27 February 2019

Company Secretary
Emmaus Holdings (Pty) Limited


JSE Sponsor
Grindrod Bank Limited

Date: 27/02/2019 11:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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