Business Rescue Transaction of the Year
DealMakers Annual Gala Awards
Due to the increase in business rescue proceedings over the last few years, compounded by the COVID-19 pandemic, DealMakers took the decision to recognise the valuable work undertaken in the business rescue space and introduced a new gold medal award in 2020.
2021 Business Rescue Transaction of the Year
Gold Medal Award
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.
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.
The local advisers were:
Engaged Business Turnaround, Deloitte Corporate Finance and Absa
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.
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.
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
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 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.
The local advisers to the process were: Redford Capital, PSG Capital, Werksmans, ENSafrica, Webber Wentzel and Letsema Corporate Finance.
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