CIG slumps on business rescue proceedings

Published Date: 2020-11-04 | Source: Stephen Gunnion | Author: Stephen Gunnion

Negotiations with funders for a voluntary debt restructure of its Consolidated Power Projects subsidiary were unsuccessful.

Consolidated Infrastructure Group's shares slumped yesterday after it said it was placing its power infrastructure business in business rescue. After failing to convince funders to back the voluntary restructure of Consolidated Power Projects (Conco), its directors resolved that the business rescue would be in its best interests.

Conco has been fighting for survival due to a dearth of new contracts and large impairments. Last week, it said negotiations on concessions to the terms of agreement of the debt restructure were ongoing. It had been engaging with bond holders and local bank lenders to Conco to restructure its short-term debt profile into a longer-term, more sustainable debt structure. In August, it said Covid-19 and the extended lockdown in SA had significantly impacted both CIG and Conco and brought most of the group's operations and construction sites to a standstill for two months, followed by a slow restart. During the period, Conco also experienced delays in collection of debtor's payments both in SA and the Rest of Africa, which placed further pressure on the group.

CIG said Conco's board of directors was finalising the appointment of a business rescue practitioner and would lodge the necessary documents for their appointment with the Companies and Intellectual Property Commission in the next few days.

Last week, the company said it had appointed Metis Strategic Advisors, specialists in debt restructure, to assist both CIG and Conco, with the objective to conclude a debt restructure as quickly as possible, saying the restructured debt profile for both the company and Conco was critical to their sustainability and trading ability.

Its shares closed 65% down at 7c yesterday.