South African construction heavyweight Basil Read, said it plans to raise up to US$23 million through a rights-issue to boost its restructuring efforts in the wake of a half-year loss.
It said a poor performance by its roads division, along with the need to invest in new contracts at its mining business, has severely depleted liquidity.
In a statement, Basil Read confirmed that it would step up its restructuring that would yield results in 2018.
“On a longer-term basis, we are in the process of raising capital through a rights issue. It is anticipated that total funds arising from this will be in the region of 200 million rand to 300 million rand,”the company said in a statement.
In the short-term, Basil Read has secured 90 million rand from the Industrial Development Corporation for the mining division and an initial 61 million rand bridging facility, it said.
South Africa’s construction industry has slowed sharply since the country hosted the 2010 World Cup that resulted into a booming industry.
Weak commodity prices
Infrastructure spending in South Africa has stalled and weak commodity prices have hit spending from the mining industry.
Basil Read, which had headline earnings per share of 48.92 cents in 2016, reported a loss of 295.16 cents for the six months ended June . It said its net operating loss was 474.1 million rand compared with a 34.4 million rand profit a year ago. ($1 =13.0402 rand).