[miningmx.com] — CONSTRUCTION group Murray & Roberts Holdings said on Tuesday that it would close or dispose of underperforming units within its steel business before the end of the financial year.
Its Cape Town Iron & Steel Works (Cisco) steel mill would be the main disposal.
In a note to shareholders, M&R said that Cisco would be “rationalised” because of adverse market conditions.
“A program (sic) of closure and/or disposal of underperforming assets has been initiated for implementation within the financial year, subject to regulatory process,” the group said in October.
M&R spokesperson Ed Jardim told Miningmx a party was potentially interested in acquiring Cisco, but that nothing had been finalised as yet.
The preconditions to the regulatory process for business restructuring have been completed, M&R said. It added that affected parties had been notified that it intends to dispose of Cisco as a priority, “failing which certain operations will be closed or rationalised”.
M&R said it “regrets the need to exercise this difficult option and the impact it is likely to have on affected employees”.
“All reasonable options to mitigate the impact of this decision will be considered during the restructuring process,” it said.
M&R CEO Brian Bruce said in August at its annual results presentation that R1.4bn owed to the group in unpaid claims was largely responsible for halving its earnings at year to end-June 2010 from 675c to 340c.
The claims included R670m in cost overruns on the Gautrain, and work done on the Dubai International Airport and the Eskom power programme.
The group’s operating profit declined by 36% to R1.8bn. The order book, an indication of how much work a construction company expects to garner in the year, also showed a drastic decrease from R42bn over the last 15 months to R30bn in the last six months.
