JOHANNESBURG, March 12 – Diversified construction Group Five said on Tuesday it had resolved to place its companies into business rescue and had applied to the Johannesburg Stock Exchange to suspend trading in its shares immediately over cash flow troubles.
“Group Five, its wholly-owned subsidiary, Group Five Construction Proprietary Limited (G5 Construction) and a number of other direct and indirect subsidiaries have for some time been experiencing cash flow difficulties,” it said, adding these emanated from, among others, significant operating losses and negative cash flows in G5 Construction and its direct and indirect subsidiaries.
The financial constraints were exacerbated by the calling of guarantees in issue of US$62.7 million last November and $43.8 million in December relating to the Kpone Gas and Oil-Fired Combined Cycle EPC power plant contract which the client terminated.
“G5 Construction Group is currently conducting retrenchment proceedings and it is estimated that a significant amount of severance pay will become payable to retrenched employees pursuant thereto,” it said. (ANA)