Embattled Murray & Roberts (M&R) shareholders saw some reprieve yesterday after the share price gained 11.1% to R1.10 after the group announced an agreement to regain control of a key Australian subsidiary that went into administration.
M&R, which posted an attributable loss of R2.5 billion for the six months to December 31 compared with R55 million profit a year before, had also on Monday announced plans to sell its 65% shareholding in Insig Technologies to the AvidSys Group (Avid). Insig is an Australian mining technology company, focused on developing mine automation services, providing sensor, software, and autonomous solutions.
On December 5, 2022, M&R voluntarily put its holding company in Australia, Murray & Roberts Pty Ltd (MRPL), into administration, as well as the Australian construction and engineering subsidiary, Clough, and the MRPL subsidiary RUC Cementation Mining (RUC).
Over the past year, the international construction and engineering group’s share price has fallen dramatically from as much as R13.10, after group’s performance was struck by a combination of rising costs, the after-effects of the Covid pandemic and the impact of a weakening global economy on investment appetite.
Yesterday, M&R said it had entered into an agreement with the administrators of MRPL in order to regain control of Australia-based RUC Cementation Mining.
M&R, MRPL and the administrators have entered into a Deed of Company Arrangement (Doca) term sheet. The terms were “confidential at this stage”, and there were conditions to the Doca; including credit approval and MRPL creditors approving the Doca proposal at the second meeting of creditors.
Information about the Doca proposal would be available in the administrators’ report to creditors ahead of the meeting expected in mid-May 2023.
Should the conditions to the Doca be met, it was expected that the Doca would be implemented by June 30, 2023.
Upon completion of the Doca, MRPL would come out of administration free from any further impact of the Clough administration.
Control of MRPL, together with RUC, its wholly owned Australian subsidiary company, would revert to Murray & Roberts.
“The execution of the Doca term sheet reflects an important first step in the group’s efforts to regain control of RUC. Should the Doca complete, RUC will be reinstated within the group and the full scale and capability of the group’s multinational Mining platform would be re-established,” M&R’s directors said yesterday.
Meanwhile, on the Avid transaction, M&R had developed Insig from a small technology company into a mining technology solutions provider over the past few years.
Insig manages the technology that is changing the face of mining, including underground communications, remote monitoring of equipment, digitisation and the interpretation of real-time data to drive operational efficiencies.
The deal with AvidSys comprised a nominal value of A$1 (R12), with Avid assuming A$7 million of Insig’s liabilities. Insig had a net asset value of A$2.9m and made a loss of A$1.7m for the year to February 28, 2023.
In M&R’s 2022 annual report, the group said its Mining platform’s order book had been held back by slower investment from major clients in North America, mainly due to the after-effects of the pandemic, and the consensual early termination of the Kalagadi contract in South Africa.
During the second half of the year, the platform secured a slew of contracts, putting it on the front foot once again. The bounce-back, however, came too late to reflect in 2022 financial year’s revenue and earnings, but this was expected to flow through in the new financial year.
The group said decarbonisation was creating unprecedented opportunity for the business.
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