BusinessLive reports that another decades-old construction firm has been pushed to the brink of collapse, with engineering and building group Esor on Monday applying for business rescue of its largest subsidiary, Esor Construction.
Largely to blame is the eThekwini municipality for hoarding R36m of Esor’s cash under a retention clause signed for the Northern and Western Aqueduct project. Esor CEO Wessel van Zyl said that if eThekwini had released the funds 12 months ago when approached, "we wouldn’t be in this position today". Construction companies usually put down 10% of the value of a project with clients as a form of security. "It’s my cash, but it’s lying in the client’s bank account. I think cash retention is one of the main items impacting on contractors today," Van Zyl observed. Esor is also owed R22m by fellow construction outfit Basil Read, but is unlikely to get that money back after Basil Read itself applied for business rescue. One of the biggest groups, Aveng, is also teetering after Murray & Roberts walked away from a bid to buy the company. Former Esor CEO and current nonexecutive chairman Bernie Krone said "at our peak we employed close to 5,000 people. We’re down to 1,400 people and they’re probably going to lose their jobs — that’s what is really sad about it." The company has begun retrenchments to cut costs by about R4m a month.
- Read this report by Giulietta Talevi in full at BusinessLive
- Read Esor’s press statement at Moneyweb
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