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DealMakers - 2023 Annual

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Business Rescue Transaction of the Year

Cast Products South Africa

Cast Products South Africa (CPSA), 85% owned by the Industrial Development Corporation of South Africa(IDC), was placed in voluntary Business Rescue by its board in December 2021. Engaged Business Turnaround and Chrisyd Advisory Services were appointed as the Business Rescue Practitioners (BRPs) in late January 2022. As the strategic equity partner, US-based Amsted Rail held the remaining 15% stake. 


CPSA is the largest foundry group in South Africa – creating quality cast products used in the mining, railway, power and general engineering industries – and employs approximately 830 staff. The company was unbundled from the Scaw Metals Group in 2018.


Heavy industry in South Africa has been in decline for many years, and the foundry business is under pressure from escalating input costs, particularly electricity and scrap metal. 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. The IDC has loaned CPSA R450m in post-commencement finance to fund operations. 


In CPSA’s business rescue plan, several reasons are listed for the company’s financial distress, chiefly a “dysfunctional

management team”, no internal controls, ineffective procurement processes that led to inflated prices from suppliers, ineffective security controls, and a tendering system that didn’t work.

The BRPs are presently in the process of restructuring the Board and appointing a strategic management team to take the business forward. An announcement is expected by the end of February, followed by a short handover period.


 The transaction was complex because of the interplay between the Companies Act and the Public Finance Management Act (PFMA), to which the company (as a state-owned enterprise)was subject. The intersection of these two pieces of legislation required careful navigation. In addition, CPSA – as a manufacturer reliant on other state-owned entities as clients to support its business while in business rescue – presented a risk to highly regulated customers.

The rescue practitioners received multiple bids for two of CPSA’s smaller plants and businesses, and the process involved three different stages of evaluation, with the ultimate assessment based on capability and price. However, the two successful bidders failed to implement their offers, resulting in the decision by the shareholders of CPSA to provide funding to settle creditors.

Once this decision was taken by the shareholders, the BRPs moved to fix and restructure the group with the full support of the IDC. Of the five divisions, three were identified as core: the wheel plant foundry, of which there exist only three in the world, with the SA plant supplying Transnet with 60% of its spare parts, the Boksburg Foundry, involved in the manufacture of smaller parts for the mining industry, and the UJ Foundry, supplying larger parts for Transnet, Eskom and the mining industry. The Standard Foundry property and Eclipse East Foundry were sold to the GeT Metal Group. Eclipse was sold as a going concern, and the Standard Foundry property was a thriving foundry until Scaw Metals acquired it and closed it. Eclipse had not been operating at anywhere near optimum capacity, and there was a need for extensive maintenance, repair and refurbishment throughout the whole plant.


Through a high operational and production-focused turnaround, the company was taken from an average monthly loss of R40m to profitability in November 2022.The company produces for both the local and export markets. The BRPs note that there is strong and increasing potential demand for CPSA’s products in the mining sector, as well as in the power generation (Eskom) and rail sectors(Transnet).

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Local Advisers

Engaged Business Turnaround, Chrisyd Advisory Services and ENS.

Comment from the Independent Panel:  The panel noted that Cast Products must comply with the PFMA, increasing the complexity of a business rescue process which also spanned multiple jurisdictions. The BRP process was large in terms of scale, saving a heavy manufacturing business important for South Africa.

The restructuring and restoration of solvency has been finalised, and the BRPs have filed a
notice of substantial implementation, so CPSA has managed to restructure over R1bn of liability, retain the manufacturing capacity for South Africa, and preserve the corresponding jobs under circumstances where the manufacturing industry is facing challenging economic times. The conversion of debt to equity will see the IDC’s shareholding in CPSA increase to 93,5% and that of Amsted Rail reduce to 6,5%.

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DewCrisp Western Cape

Established in 1983, DewCrisp grew into a leading provider of value added salad products to the retail and food services industries. It pioneered GFT (gravel farming technique) and hydroponic farming in the 1980s, and introduced lettuce varieties to South African retail and consumers. The company changed salad consumption patterns by introducing prepared fresh salads and fresh salad ingredients to the consumer, and became the key supplier of all fresh produce to McDonalds, KFC, Burger King, Hungry Lion and Nando’s nationally.

With 700 employees, the company applied to enter business rescue in July 2023, with Business Rescue
Practitioners (BRP) appointed in August. At the time, the company 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 company took the decision to consolidate operations in order to create scale and increase operating efficiencies, which itself resulted in additional costs. Further pressure was added by unexpected commodity price increases caused by the Russia/Ukraine war, increasing global inflation, a weakening exchange rate, and load shedding.

Local Advisers

Engaged Business Turnaround and Werksmans.

Comment from the Independent Panel:  This process required the business rescue practitioners to get deeply involved in the detail of the business, with the outcome being its continuation and 345 jobs saved.

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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. Key customers also assisted by providing deposits to facilitate ongoing trade. Loss-leading products were eliminated from the product mix, and appropriate price increases were implemented. Changes were made in key areas of management, operations, point of sale recoveries and customer mix. 


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. While retrenchments were unavoidable, the staff affected were compensated with full packages versus a statutory payment in a liquidation scenario, and the remaining 470 employees (345employees with a further 125 staff employed on a casual basis where needed) continue to benefit from monthly income. Post commencement financiers and creditors are to receive payment in full for their claims against the company.

BR Pick of the best in alphabetical order

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