Wednesday, January 19

Stefanutti Stocks makes slow progress with Eskom claims and disputes


The JSE-listed construction group Stefanutti Stocks is making progress in its disputes with Eskom following allegations by the energy company that it had overpaid nearly R4 billion to various contractors for the Kusile power plant, including about R 1 billion to two Stefanutti Stocks joint ventures (joint ventures). ).

Read: Stefanutti Stocks breaks silence on alleged payments to enrich Eskom officials

Moneyweb Insider Gold

Join heated discussions with the Moneyweb community and get full access to our market indicators and data tools while supporting quality journalism.

R63/month or R630/year

SUBSCRIBE NOW

You can cancel anytime.

Stefanutti Stocks also provided an update on Thursday on the progress in implementing its restructuring plan, which aims to optimize the group’s capital structure and provide it with access to liquidity to position the group for long-term growth.

The group’s lenders provided him with a total financing of R1.205 billion, most of which was anticipated to be repaid at the end of February 2022.

Delays

However, Stefanutti Stocks Chief Executive Officer Russell Crawford said on Thursday that the principal portion of the loan repayments, expected to begin in July 2021, has not materialized due to the slower-than-anticipated sale of certain operations, a delay in regulatory processes related to the disposal of Al Tayer stocks, and the failure to implement a material handling and tailings management subdivision transaction.

“The group is currently in negotiations with the lenders to extend the principal repayments and the duration of the loan until February 28, 2023,” he said.

Read: Stefanutti Stocks auditors raise concerns about ‘going concern’

In an update to Package 16 of the Kusile SSBR JV Construction Project (Stefanutti Stocks Basil Read joint venture), Crawford said that all construction work is complete, including hitches, but a small maintenance team will remain on site until December 2021 dealing with any defects.

It said commissioning is still on track to be completed in December 2021 for all areas where access and services are available.

Crawford added that the final measurement process is ongoing and good progress has been made, resulting in positive certification and pay.

“Eskom continues with its adverse certification process, but SSBR has been able to motivate the certification for an amount of R47.3 million for this period [six months to end-August 2021], with R21.2 million received and the balance owed before December 16, 2021 ”, he said.

Crawford said other issues that the parties cannot resolve will be referred to the Dispute Resolution Board (DAB) for a decision.

He said independent quantum experts are in the process of completing their exercise of interrogating the total cost incurred on the project.

“The interrogation was carried out by sampling and to date no anomalies have been found.

“The parties are still on track to substantially resolve the disputes by February 2022,” he said.

Covid-19 claim

Crawford said the joint venture was successful with its Covid-19 claim, with the final award over the expected amount for this month, but that an additional 77 claims were sent to the engineer after December 2019, of which 30 included cost claims. additional.

He said that the engineer has only responded to 14 of the site’s 77 claims to date, but following the successful dispute over the Covid-19 claim award, “the engineer has acknowledged that his interpretation of the contract may be incorrect and therefore therefore, you must reevaluate all the claims submitted by the site. ”

Crawford said all disputed claims will be referred to the DAB.

Regarding Kusile Power Station SS-Izazi JV Package 28, Crawford said that the joint venture initiated award procedures during June 2018 in relation to many compensation events that had not been evaluated, but this contract was terminated during February 2019 due to Eskom’s inability to provide access to the JV to complete the works.

Crawford said the engineer issued two negative final payment certificates in August 2019 and April 2020, alleging that overpayments had been made to the joint venture.

He said this prompted the notification of many new disputes, which were later included in the adjudication process, with adjudication hearings held during November 2020 and February 2021.

“Since several disputes relate to the measurement of the works, the joint venture and Eskom have embarked on an independent expert process to resolve these disputes.

“To accommodate this independent expert process, the arbitrator has been asked not to publish his decision.

Independent experts are still on track to substantially complete the measurement of the quantity list for February 2022.

“Given the magnitude of the amounts in dispute, it is highly likely that disputes will be referred to arbitration,” he said.

Read: The construction company Stefanutti Stocks hit by a cyber attack

Restructuring plan

In an update to the restructuring plan, Crawford said that by the end of October 2021, several properties had been sold, including:

  • The group’s formwork yards in Midrand for R28 million;
  • A residential property in Sasolburg for 500,000 rand;
  • The remaining units of the Northern Views Pretoria residential development, with net revenues of R24.4 million;
  • Vacant industrial land in George for R1.4 million; and
  • An industrial property in Kempton Park for 1.9 million rand.

The group also has:

  • He received the initial purchase consideration of R92 million for his 49% stake in Al Tayer in the United Arab Emirates;
  • Received R58 million from the sale of underused plant and equipment; and
  • It has raised R 18 million in balances owed by the Zambian government since the beginning of its financial year, and plans to raise another R 48 million.

Interim results

Stefanutti Stocks reported on Thursday a 23% increase in revenue from continuing operations contracts to R3.2 billion in the six months to August from R2.6 billion restated in the prior period.

Operating profit improved to R5 million from restated operating loss of R161 million.

It reported a loss of earnings per share of 67.12 cents from total operations for the period.

The group’s order book for continuing operations is currently R 4.6 billion, of which R 1.6 billion relates to work beyond South Africa’s borders.

Legacy ‘messy’

An analyst who did not want to be named said Stefanutti Stocks still faces the legacy of many claims and issues, including claims and disputes with Eskom, which “is complicated.”

“The whole presentation was retrospective. Continuing with operations, they still had losses and the order book is not looking spectacular, ”he said.

The analyst said the problem Stefanutti Stocks faces is that what they pay lawyers is quite often more than they will recover from claims and contract disputes.

Stefanutti Stocks revealed that total operations consumed R141 million in cash in the reporting period due to the impact of Covid-19 and current dispute resolution processes.

Stefanutti Stocks shares were unchanged on Thursday at 0.50 rand.


www.moneyweb.co.za

Leave a Reply

Your email address will not be published. Required fields are marked *