One of South Africa’s biggest companies commercially insolvent

South African engineering company, Murray & Roberts says the business rescue plan of its main operating company will leave the company commercially insolvent, with the board looking to voluntarily wind up the business.

Murray & Roberts Holdings published its interim results for the six months ended 31 December 2024, showing a loss before interest and tax of R646 million, up significantly from the loss of just R2 million in the year ended June 2024.

This loss was attributed to guarantees from Murray & Roberts Ltd (MRL) projects being called by clients to fund project completion.

As the holding company provided surety to the guarantee providers, it reflected the associated loss in the current period.

The group’s results were presented with MRL’s finances listed as discontinued operations as it is in business rescue.

MRL saw Revenue of R4.6 billion and a loss before interest and tax of R960 million.

The group reported an attributable loss of R1.4 billion, with a basic loss per share of 167 cents for continuing operations, and a loss per share of 414 cents when including discontinued operations.

During the period, the group had reduced its debt with a consortium of banks from around R2 billion to R409 million, agreeing to pay off the amount by 31 January 2026.

The group said it would raise funds though refinancing, the sale of non-core assets and by raising R350 million through a working capital facility.

How business rescue will hit the parent

Murray & Roberts Ltd is the group’s primary operating company which entered into business rescue in November 2024 after what it called a “perfect storm” of setbacks.

The group comprises:

• Murray & Roberts Holdings – the publicly listed parent company
• Murray & Roberts Ltd (MRL), which has one operating division, OptiPower, and directly owns Cementation Company Africa and Murray & Roberts UK

Murray & Roberts experienced significant liquidity constraints, impacting operations, leading to substantial losses due to delays in equipment procurement and project progress.

A final blow came in November 2024 when De Beers resolved to review its operational plans at the Venetia Mine in South Africa, resulting in the ‘descoping’ of its contract with Murray & Roberts Cementation Pty Ltd.

“This contract represented more than 50% of Murray & Roberts Cementation’s revenue and this descoping exacerbated the liquidity squeeze across the group’s South African operations,” it said.

This ultimately led to the business being put into business rescue proceedings on 22 November 2024, with the group losing control of the company and its subsidiaries.

Subsidiaries were deconsolidated from the interim results, with MRL being classified as discontinued operation.

In an update on the business rescue proceedings, the group said that the business rescue plan was approved by creditors on 8 April 2025.

The plan includes the sale of MRL’s main assets, being the Cementation Company and Murray & Roberts UK.

In terms of the BRP, the assets will be sold to a consortium of investors led by Differential Capital.

The Differential investors have already invested in MRL through the provision of post commencement funding since the start of the Business Rescue Process of MRL in November 2024.

These investments provided the group with sufficient cashflow to continue its operations, allowing the Business Rescue Practitioners to find viable alternatives to the potential liquidation of MRL.

The group said that the proceeds of the sale should be sufficient to repay all secured creditors, but concurrent creditors will only be partially repaid.

Unsecured or concurrent creditors are estimated to receive between 5 and 10 cents in the rand.

The proceeds will also cover the payment of retrenchment packages for staff at the group’s head office, and at Optipower.

However, Murray & Roberts Holdings won’t get anything.

“As the sale of assets will not realise sufficient cash to settle all creditors, there would be no distribution to the shareholders of the (holding company) from the sale of MRL’s main assets,” it said.

The group said the implementation of the plan will result in the Murray & Roberts Holdings not having any operating companies and thus no prospect to generate cash through operations, or to recapitalise.

The liabilities of the company exceed its assets, resulting in the company being commercially insolvent.

“Consequently, following the approval of the business rescue plan, the holdings board resolved that it be recommended to shareholders that a creditors’ voluntary winding-up of the company be persued,” it said.