Basil Read Holdings Limited (JSE:BSR) News - Update to the Basil Read Limited Business Rescue Plan

Basil Read Holdings Limited
Incorporated in the Republic of South Africa
Registration Number 1984/007758/06
Share Code: BSR ISIN: ZAE 000029781
(“Basil Read Holdings” or “the company”)

UPDATE TO THE BASIL READ LIMITED BUSINESS RESCUE PLAN

Shareholders are referred to the announcements previously
released on SENS on 28 June 2019 and the related announcements
issued during the course of 2019, including the last
announcement on 8 October 2019, Basil Read Limited (“BRL”) (a
subsidiary of the Company) Business Rescue proceedings and
are advised that the Business Rescue Plan is in the process
of being implemented.

Given that the Business Rescue proceedings of Basil Read
Limited have not been concluded within three months of the
commencement thereof the Business Rescue Practitioners
publish a monthly update report in terms of section 132(3)(a)
of the Companies Act 71 of 2008 (“Companies Act”). In this
regard   the   ten   updates   reports   are   available   on
www.matusonsassociates.co.za/basilread/    along   with   the
Business Rescue Plan and these Update Reports should be read
in conjunction with the Business Rescue Plan.

The tenth report covering the period from October to December
2019, provides for the following significant developments:
 1. Most of the construction contracts that the BRL had at the
    commencement of Business Rescue proceedings, which were
    loss making and causing a cash drain, have either been
    completed, ceded or have been terminated. Only two
    contracts remain to be completed out of 27 contracts at
    the commencement of Business Rescue proceedings;
 2. The aggregate contingent liability of R1.1 billion at the
    date of business rescue has been reduced to R575 million;
 3. From the seven contracts that have been cancelled,
    performance guarantees have been called in only three
    instances and BRL continues negotiations to mitigate
    losses arising from the call of the guarantees;
4. The Business Rescue Practitioners (“BRPs”) have employed
   additional resources to pursue contractual claims in order
   to pay the Post Commencement Finance (“PCF”) and Business
   Rescue costs;
5. BRL’s subsidiary concluded transaction to sell and lease
   non-core properties, as approved by the JSE in September
   and November 2019. As a result, the Group moved to a new
   head office, significantly reducing its operating costs;
6. BRL has paid retrenchment costs and has seen a significant
   reduction   in   overhead   costs   through   accelerating
   retrenchments and moving to the new premises; and
7. the remaining businesses, being the Mining Services and
   Developments Businesses, continue to perform as expected
   and continued to secure new opportunities.

The above status demonstrates significant progress in
meeting a key objective of the Business Rescue Plan which
was to facilitate the completion of loss-making construction
contracts and to minimise the risk of the performance
guarantees being called.

The other objective of the Business Rescue Plan was to
maximise the value of construction claims. In this regard the
BRP’s have reported that the process is time consuming,
tedious and costly. While there have been      challenges as
reported in the Updates, the BRPs, however, have        noted
significant positive victories particularly in the Trans-
Caledon Tunnel Authority (“TCTA”) and Transnet contracts. In
these two instances the Dispute Adjudication Board (“DAB”)
ruled in the favour of the company for a significant number
of claims and reversal of negative certificates. The company
continues to pursue the other outstanding claims which are
substantial. The success in the recovery of these claims will
impact materially on the end result of the business rescue
process.

The sale of the non-core assets remains an objective of the
Business Rescue Plan. In this regard, shareholders are
referred to announcement regarding the sale of the Head Office
Properties. It was further announced that the Group has moved
to new premised enabling a significant reduction of the
operating costs.

The retained businesses, being the Mining and Development
business, which are not in business rescue, continue to
perform well and remain self-sustaining. The BRPs have
appointed an independent sales advisor to value the Mining
business and adjudicate on potential offers for the business.

The business rescue practitioners remain of the view that a
full implementation of the Plan will achieve a better result
than a liquidation.

From a Basil Read Holdings Limited perspective, the
implementation of the Business Rescue Plan of Basil Read
Limited continues. However, its effect at a group level
remains uncertain until it is completed. Therefore, the
suspension will remain in place until the implementation is
complete and the effects on the group can be determined.

Bedfordview
8 January 2020

Company secretary


Emmaus Holdings (Pty) Limited


JSE Sponsor
Grindrod Bank Limited

Date: 08-01-2020 04:45:00
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