Group Five budgets for R233m in retrenchment pay as it enters business rescue
Group Five [JSE:GRF] has said it is conducting retrenchment proceedings and has estimated it will need to pay out R233m in severance pay as it enters business rescue.
The group's board did not say how many of its employees would be affected.
The construction and engineering group also confirmed on Thursday in a note to shareholders that it has received confirmation from the Companies and Intellectual Property Commission of the registration of the resolutions placing it and G5 Construction into business rescue.
Group 5 announced on Tuesday that the board of Group Five and Group Five Construction had resolved to place each of these companies into business rescue in accordance with Chapter 6 of the Companies Act of 2008.
Group Five Construction, is a wholly owned subsidiary of Group Five, is facing a cash shortfall of R2.39bn.
The firm's stock, meanwhile, has been suspended at 89 cents per share
It said in an update to shareholders that the CIPC had confirmed the interim appointment of David Lake and Peter van den Steen of Metis Corporate Advisory as business rescue practitioners.
The boards of the two companies passed a resolution on Monday, March 11, in Sandton, laying out the financial position of the two companies.
It said that G5 Construction was "financially distressed and it is reasonably unlikely that G5 Construction will be able to pay all of its debts".
G5 Construction experienced negative cash flows of R880m in 2018, said the board, and would need R3.6bn to fund its working capital requirements up to December 2019.
It said the construction company was not able to itself generate such working capital or raise it from other Group 5 companies or third parties.