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- Basil Read's business process, which started in June 2018, is yet to wrap up.
- The construction company, however, is making some progress in completing its contracts.
- But it is battling to recover contract claims in some cases.
Construction company Basil Read's business rescue process is approaching four years as it works to recover contract claims which will help it meet its commitments.
Basil Read, which has been involved in some of the country's key infrastructure projects, including the construction of Eskom's Medupi and Kusile, entered business rescue in June 2018. Basil Read was among the companies found to have benefited from overpayments in the construction of Kusile power station.
In the latest business rescue update, tabled in February, practitioners John Lightfoot and Siviwe Dongwana indicate progress in completing three remaining construction contracts.
These include a contract with Umgeni Water for its Rosetta Water Treatment Works, which was due for completion in March, the update indicated. Another contract relates to the Trans-Caledon Tunnel Authority's Olifants River Water Resources Development Project - commercial closure of the project is expected in the second quarter of 2022. Basil Read is also expected to receive performance certificates for its projects at Medupi this year. The performance certificates are issued when a contractor meets its obligations.
The practitioners noted that Basil Read continues to pursue contract claims - which are court cases that arising out of a breach of contract - in order to recover payments for work. These processes can be "time-consuming, tedious and costly". Covid-19 lockdowns have negatively impacted claim recoveries, especially when it comes to legal processes.
FNB Wealth and Investments head of research Chantal Marx explained that the contract claims can also be lodged against the contractor - if clients claim the work was completed late or not up to standard.
Recovering the claims are important for the company to meet its commitments, according to Basil Read's business rescue practitioners.
"Although there has been considerable progress in obtaining favourable rulings with respect to certain of these claims, some employers (clients) continue withholding payments necessitating additional legal action to enforce the rulings. Thus, the timing of receipts of funds for these claims remains uncertain," the update read.
READ | Eskom names contractors in R4 billion Kusile overpayment
Construction guarantees have been reduced to R72.8 million, compared to R1.1 billion when the business rescue process started. Construction guarantees are offered to project owners or clients, to serve as a guarantee of the contractor's performance.
The practitioners are still of the view that business rescue is better than liquidation.
Marx similarly noted that business rescue is better than liquidation - but added that the process has been going on for "quite some time". "The company exiting business rescue and resuming operations as a 'going concern' will be the best outcome," she said.
As it is still in business rescue, the company is not in a position to publish its half-year results for the period ending 31 December, 2021.
