Business / Companies
Murray and Roberts to restructure its debt
21 Sep 2012 at 03:58hrs | Views
Murray and Roberts is mulling a move to correct its debt structure through seeking to access cheaper long term funding from regional financial institutions, CE Stuart Mangoma told an analysts briefing yesterday.
"The current capital and cost structures need to be reversed as funds are costing 13% whilst shareholders are getting 6.7%, meaning that it favours banks at the expense of shareholders," he added.
The business is also seeking to liquidate its investment property portfolio, which Mangoma said was worth between $5 million and $6 million, in a bid to unlock value. The capital structure correction is going to be made possible through leveraging on the new major shareholder - Zumbani Capital's relationship with Brait - a South African based private equity fund, which has access to long term funding.
The group is also going to seek access to regional business since the returns from outside Zimbabwe projects were higher. There is also room for growth through acquisition of businesses involved in infrastructure related products in order to realise the dream of the manufacturing arm – Proplastics being a regional supplier of infrastructure related products.
Turning to the outlook for the divisions, Mangoma told the briefing that the contracting division has a confirmed order book of $35 million of which 65% was from the government whilst 35% was from the mining sector. Mangoma said the division is expected to generate revenues of $45 mln and profits amounting to $1.7 million in F13 relative to the $26.8 million and $0.5 million revenues and profit achieved in F12.
According to Mangoma the major challenges that faced the construction division in F12 were deferred start dates for projects, few available projects which were short term in nature whilst at the same time being small to medium sized.
Mangoma noted that the government had lots of projects but was experiencing funding limitations.
"The current capital and cost structures need to be reversed as funds are costing 13% whilst shareholders are getting 6.7%, meaning that it favours banks at the expense of shareholders," he added.
The business is also seeking to liquidate its investment property portfolio, which Mangoma said was worth between $5 million and $6 million, in a bid to unlock value. The capital structure correction is going to be made possible through leveraging on the new major shareholder - Zumbani Capital's relationship with Brait - a South African based private equity fund, which has access to long term funding.
The group is also going to seek access to regional business since the returns from outside Zimbabwe projects were higher. There is also room for growth through acquisition of businesses involved in infrastructure related products in order to realise the dream of the manufacturing arm – Proplastics being a regional supplier of infrastructure related products.
Turning to the outlook for the divisions, Mangoma told the briefing that the contracting division has a confirmed order book of $35 million of which 65% was from the government whilst 35% was from the mining sector. Mangoma said the division is expected to generate revenues of $45 mln and profits amounting to $1.7 million in F13 relative to the $26.8 million and $0.5 million revenues and profit achieved in F12.
According to Mangoma the major challenges that faced the construction division in F12 were deferred start dates for projects, few available projects which were short term in nature whilst at the same time being small to medium sized.
Mangoma noted that the government had lots of projects but was experiencing funding limitations.
Source - zfn
