Business Rescue Transaction of the Year
DealMakers Annual Gala Awards
2023 Business Rescue Transaction of the Year
Cast Products South Africa
Cast Products South Africa (CPSA), the largest foundry group in South Africa and 85% owned by the Industrial Development Corporation of South Africa (IDC), was placed in voluntary business rescue by its board in December 2021. In the four years until it was placed in business rescue, the company lost c.R1,7m, excluding the losses that accumulated after the IDC acquired Scaw Metals from Anglo American in 2010 as a result of pressure from escalating input costs, particularly electricity and scrap metal. The restructuring and restoration of solvency has been finalised, and the BRP’s are presently in the process of restructuring the Board and appointing a strategic management team to take the business forward. R1bn of liability has been restructured, the manufacturing capacity for South Africa has been retained, and corresponding jobs preserved under circumstances where the manufacturing industry is facing challenging economic times.
The local advisers to the deal were:
Other shortlisted nominees for the 2023 Business Rescue Transaction of the Year:
DewCrisp Western Cape
With 700 employees, the company applied to enter business rescue in July 2023. At the time, DewCrisp was facing three liquidation applications and it was in a state of severe financial distress, with virtually no working capital available. The company’s financial position was adversely affected by the COVID-19 pandemic and the lockdown measures put in place. Not only was retail income affected by the status quo, but so too were the crops which could not be harvested nor sold. The BRPs and the rescue team, assisted by management, worked on improving the profitability and sustainability of the company by undertaking an extensive operational restructuring. The business rescue process was successful in preventing the liquidation of the company, with 99% of creditors voting to adopt the business rescue plan. Additionally, the current shareholding remains intact.
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Local Advisers: Engaged Business Turnaround and Werksmans.
CIG and CONCO
2022 Business Rescue Transaction of the Year
The local advisers to the deal were:
Marylou Greig (DealMakers), Arie Maree (Ansarada), Martin Liebenberg (Metis), Dean McHendrie (Birkett Stewart McHendrie), Josh Cunliffe (Metis) and Gerhard Albertyn (Metis).
The GIC and CONCO business operate in the infrastructure and construction sectors focused primarily on energy, electrification, building and oil and gas and, as a result, the business rescue of these groups were both large and complex due to multi-disciplinary operations involved. GIC was listed on the JSE when it entered business rescue. The successful operational restructuring implemented disposed of operationally stable, efficient and profitable going concerns resulting in the retention of jobs within those businesses and maximisation of net proceeds for all affected parties.
Comment from the Independent Panel:
The complex group structure and 25 jurisdictions made this a very difficult process. It required multiple sales processes, as well as the managed winding down of parts of the group, leading to a far better outcome for all stakeholders when compared with liquidation.
Other nominees for 2022 were:
Ster-Kinekor
SA’s largest cinema chain with 65% of market share entered business rescue in January 2021 citing financial distress due to COVID-19 related restrictions and increased competition from streaming platforms. The consortium comprising UK-based asset manager Blantyre Capital and local private debt manager, Greenpoint Capital emerged as the successful bidder in the R250 million refinancing, restructure and sale of Ster-Kinekor’s assets. In November 2022 the company exited business rescue having continued operating throughout the process and without the loss of +-800 direct jobs.
The local advisers were:
EY, Webber Wentzel, Baker McKenzie and Mike Pienaar Consulting.
Andalusite Resources
The country’s remaining independent andalusite producer exited the business rescue process in May 2022 having been placed under supervision in June 2019. A world class strategic asset, Andalusite Resources is one of three main suppliers of andalusite globally with a 23% market share. Eight expressions of interest were received with ARM (a subsidiary of Nikkel Trading 392) winning the bidding process which began in July 2019. The business and all 181 employees were successfully transferred to ARM, a South African entity, under the same terms and conditions.
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The local advisers were:
GCW Administrators and Werksmans.
2021 Business Rescue Transaction of the Year
Gold Medal Award
Group Five
Peter van den Steen (Metis Strategic Advisors), Marylou Greig (DealMakers), Arie Maree (Ansarada) and Patrick Birkett (Birkett Stewart McHendrie)
The group consisted of 179 companies across 38 countries when it commenced business rescue proceedings in March 2019, delisting from the JSE in June 2020. In June 2021, the business rescue practitioners released the latest status update report. The business rescue was large and complex and returning the entire group to solvency was not feasible given the depth of financial distress. Several subsidiary businesses required restructuring prior to disposal. The adoption of an integrated approach to the Implementations Plan has resulted in substantial returns in excess of liquidation being achieved and in most cases, creating sustainable value.
The local advisers to the deal were:
Comment from the Independent Panel:
The panel had long discussions regarding the finalists, but complete consensus on our winner. The Group Five business rescue could be a case study on how business rescue should be done. Significant value protection for all stakeholders and thousands of jobs saved made this an easy deal to select. Once again, a quality submission assisted the panel to evaluate what was clearly a complicated and drawn out process.
Other nominees for 2021 were:
Consolidated Steel Industries (CSI)
The shutdown of the construction and steel fabrication industries, as a result of a slowing South African economy and the COVID-19 pandemic, created liquidity issues for CSI, a leading independent construction materials conglomerate. In July 2020 the company’s management and board took the decision to enter business rescue, the plan of which was adopted in September, having been approved by more than 98% of creditors present and voting. The speedy implementation of the business rescue plan ensured that there was a meaningful business, in the form of Global Roofing Solutions, a leading South African roofing material manufacturer, to present for sale to Rockwood Private Equity.
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The local advisers were:
Engaged Business Turnaround, Deloitte Corporate Finance and Absa
Afarak Mogale
Financially distressed, with cash flow shortages, the board of the ferrochrome producer Afarak Mogale placed it into business rescue in May 2020. All operations were placed into care and maintenance in late July 2020 owing to external logistical challenges, further cash shortages and the impact of the COVID-19 pandemic on the workforce. In September a business rescue plan was adopted by creditors outlining three possible restructuring options for company. The sale of Mogale in July 2021 to ferrochrome producer Bright Minerals, for a transaction value of R300 million, marked the exit of the company from business rescue.
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The local advisers were:
BDO Business Restructuring, Absa, Werksmans and Webber Wentzel
Fairmont Zimbali Resort
The luxury five-star hotel owned by Kuwait-based IFA Hotels and Resorts was forced into administration in September 2020 after the COVID-19 pandemic severely curtailed the hospitality and tourism sector. Initially several large offers were made for the resort but as time progressed and the process unfolded, further impacted upon by the second COVID-19 wave, The Capital Apartments and Hotels stood out as the preferred bidder for the hotel situated on the Ballito coastline. The most pressing issue faced in the process was the securing of funding for the acquisition. In March 2021 The Capital reached an agreement to buy the property, in a deal that balanced the interest of all stakeholders.
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The local advisers were:
Berrangè, Werksmans and Jones Lang LaSalle IP
2020 Business Rescue Transaction of the Year
Phumelela Gaming and Leisure
Gold Medal Award
Local Advisers
John Evans, Business Rescue Practitioner | RS Advisors
The company entered business rescue proceedings in May 2020 after deciding against voluntary liquidation. Phumelela was experiencing financial difficulties prior to the pandemic but it was the devastating financial impact of COVID-19 which led to its decision to enter business rescue proceedings. Phumelela received R100 million in post-commencement finance from local company Mary Oppenheimer and Daughters (MOD), to ensure the continuation of operations while the company underwent restructuring and the sale of assets. Bids to acquire all or some of its assets were received from among others UK bookmaker Betfred and MOD. In September creditors voted in favour of MOD (4Racing) to take control of the racing assets including the local and offshore totes and broadcasting rights.
Other nominees for 2020 were:
Comair
Comair entered voluntary business rescue proceedings in May 2020 in order to safeguard the company and its shareholders by restructuring the airline as quickly as possible so the business could once again be operational. The internal restructuring process begun in March but was interrupted by the grounding of flights in line with the COVID-19 travel restrictions. Comair become financially distressed and unable to meet debt obligations resulting in the company filing for business rescue. The evaluation of multiple bids, negotiations with lenders, aircraft lessors, creditors and stakeholders resulted in a transaction with the Moritz Consortium enabling Comair to resume trading operations in December 2020.
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The local advisers to the process were: Redford Capital, PSG Capital, Werksmans, ENSafrica, Webber Wentzel and Letsema Corporate Finance.
Edcon
In 2019 Edcon, which had been struggling for a number of years under a growing debt burden secured R2,7 billion from lenders, landlords and the Public Investment Corporation in a restructuring plan that freed the company of interest-bearing debt. In May 2020 after losing R2 billion in sales as a result of SA’s COVID-19 lockdown restrictions the owner of the Edgars and Jet chains filed for administration. Unable to find investors for the business, the administrators opted for a sale plan to transfer ownership of parts of the group in SA and Southern Africa and to save jobs. Durban-based Retailability backed by Metier Private Equity and DEG of Germany acquired 120 Edgars stores and The Foschini Group took over 425 Jet stores.
The local advisers were: Matuson Associates, Rand Merchant Bank, Investec Bank, UBS, ENSafrica, Cliffe Dekker Hofmeyr and EY