Murray & Roberts (M&R), a leading South African engineering and construction firm, announced securing R250 million in funding to aid its South African operations under business rescue. This includes a R130 million commitment from capital markets, with R40 million already received in December 2024. The move comes as the group faces liquidity challenges and shareholder uncertainty.
On November 22, M&R’s South African subsidiary and trading division, OptiPower, entered business rescue, prompting the suspension of the company’s shares on the JSE at R1.10 per share.
Capital Markets Back Mining Expertise
Investors have expressed strong confidence in M&R’s mining services, recognizing the importance of preserving the group’s capabilities in this critical sector. An additional R120 million in loan funding has also been secured, further demonstrating market confidence in the group’s recovery potential.
Challenges in South Africa’s Engineering Sector
M&R’s struggles are reflective of broader issues in South Africa’s engineering and construction industry. The South African Federation of Civil Engineering Contractors (Safcec) has highlighted an exodus of skilled engineers to countries like Ireland and the UAE, which has hindered infrastructure development and exacerbated the country’s skilled labor shortage.
Financial Status and Business Rescue Efforts
The group’s annual results to June 30, 2024, revealed shareholder equity of R1.6 billion, debt of R1.3 billion, and cash reserves of R1.6 billion. However, losses in the OptiPower division, including the descoping of the Venetia diamond mine contract, severely impacted liquidity.
Business rescue practitioners (BRPs) continue to engage with creditors and financiers, with a detailed recovery plan due by March 2025. The directors remain optimistic about the success of these efforts, particularly given the solid performance of the group’s underground mining businesses.
Mining Subsidiaries Drive Revenue
The group’s core mining assets, including Murray & Roberts Cementation, Cementation Canada, and Cementation APAC, remain the backbone of its operations. Despite challenges posed by the business rescue of the South African subsidiary, these businesses continue to meet contractual obligations and maintain healthy order books.
Outlook for Recovery
M&R’s directors emphasized the group’s resilience, citing its portfolio of high-quality underground mining assets and ongoing support from investors.
“The BRPs and the group remain confident about the prospects of a successful business rescue,” the directors said in a statement.
