JSE-listed Murray & Roberts (M&R) has voluntarily requested a halt in the trading of its shares after announcing that its M&R Limited division and the division’s subsidiary OptiPower have been placed in business rescue.

M&R, as well as its indirect subsidiaries Murray & Roberts Cementation, Murray & Roberts UK, Cementation APAC, Cementation Canada and Terra Nova Technologies, continue as a going concern and will continue to deliver on their contractual obligations.

The decision to place M&R Limited and OptiPower in business rescue follows discussions with certain of the division’s largest creditors and stakeholders.

Metis Strategic Advisors has been appointed business rescue practitioner (BRP).

The group says in a statement that it is critical for M&R Limited to find a solution for its declining liquidity position, arising principally from the losses in OptiPower, which has been exacerbated by the descoping of the contract at the Venetia diamond mine.

Following extensive modelling and testing of all viable options to address the liquidity constraints, the board believes that, based on best estimate budgets, the company’s six-month cashflow is deemed to be vulnerable to the risks of the timeframes within which shareholder approval could reasonably be obtained for the disposal of noncore assets; and final losses in OptiPower as a result of delays in procurement and project progress.

Considering the risks and given the uncertainty regarding that company’s short-term cashflow, the board is of the opinion that the best option to ensure the sustainable restoration of M&R Limited is to start business rescue of that company.

Under the direction of an experienced BRP, a return to sustainability has been assessed as readily achievable.

The business rescue process could incorporate some or all of the group’s deleveraging plan.

M&R has resolved to start a process of disposing of noncore assets to meet the group’s obligations to a consortium of four South African banks and restore liquidity.

As previously reported, the group reached an agreement with the consortium for the remaining R409-million debt, which provides for this debt to be repaid by January 31, 2026.

M&R points out that, while the group considerably reduced its debt with the consortium, it has been conducting its business in South Africa with restricted working capital facilities for an extended period.

This continued illiquidity has negatively impacted on OptiPower’s operations and given rise to unnecessary and substantial losses in the group, it points out.

In an unrelated development, Murray & Roberts Cementation’s South African operations were impacted by the recent descoping of the Venetia contract. The contract represented more than 50% of Murray & Roberts Cementation’s business in South Africa.

“It is important to note that only M&R Limited and its trading division, OptiPower, is placed in business rescue. The group’s core assets by value and earnings contributions are its underground mining businesses, which will continue to operate as going concerns, delivering on their contractual obligations with good prospects into the future,” group CEO Henry Laas assures shareholders.

“The holdings board is confident that M&R Limited is well suited for a successful business rescue. The group remains solvent as disclosed in its financial statements for the year ended June 30, with a portfolio of high-quality assets in its core underground mining businesses.

“On this basis, the holdings board is confident that a successful business rescue will result,” he adds.

“We will continue with the process of disposing of noncore assets and it is our expectation that the disposals will realise sufficient cash to settle the outstanding debt of R409-million owed to the banking consortium and most of, if not all ‘post commencement finance’ provided by the business rescue funding providers,” Laas says.