Construction Company, Group 5, has announced that it has applied for a business rescue. The company has been struggling to find the right projects to support its high cost structure.
The group has estimated that it will need to pay out over R200-million in severance pay as it enters business rescue.
The company has been in financial distress in recent years and unable to pay all its debts.
Corporate law professor at Monash Tshepo Mongalo says, “If you’re in construction and you try to consolidate and take over other businesses it is good while you can still have a lot of projects, but the fact that the projects have dried up in line with the infrastructure development programme of government being the way it was, it means that large conglomerates are going to find it difficult to get projects that will support them. Particularly if in the past they have acquired a whole lot of competitors in order to become a mega-structure.”