Protech Khuthele files for Liquidation

The rapid winding down of Protech Khuthele began after the abrupt resignation in late May of CEO Antony Page, who had run the company since September 2011.

Embattled JSE-listed construction and engineering group, Protech Khuthele Holdings has applied to the court in order to be placed under liquidation.

This was announced in a Sens statement released last week Tuesday.

An attempt to salvage some value in construction group Protech Khuthele via a voluntary business rescue process has flopped. More than 1000 jobs are on the line.

A business rescue practitioner, KPMG’s Gavin Gainsford, concluded there was no reasonable prospect of rescuing the various subsidiaries, and is now applying to court for them to be placed under liquidation. At the end of May, Protech advised shareholders it had begun business rescue proceedings after it missed publishing its annual results.

Protech shares were suspended on the JSE last week Tuesday while reflecting a price of 17c per share, way below the R60 the stock had touched towards the end of last year.

The company warned it was anticipating a loss for the year as losses from its 33% share of a joint-venture mining project in the Democratic Republic of Congo worsened. It later published a loss of R111m compared to a profit of R16.1m in 2013.

But its auditors could not obtain sufficient and appropriate audit evidence to form a conclusion on the condensed, consolidated financial statements.

Eqstra CEO Walter Hill earlier said Protech had "wasted" money defending the takeover bid. He also said issues around the group’s black economic empowerment trust had not been resolved.

Protech is collapsing under new leadership after a significant portion of its old directors jumped ship over the past few months.

The rapid winding down of the business began after the abrupt resignation in late May of CEO Antony Page, who had run the company since September 2011.

Victor Dingle, the newly appointed chief financial officer of the company, was then appointed acting CEO with immediate effect.

The group explained that the losses were partly a result of impairment of long outstanding receivables of R13.5m and non-recoverable foreign withholding taxes of R15.6m.

“In addition, continued depressed market conditions in South Africa led to idle plants and the non-recovery of overheads in the projects,” said the group.

In the financial report the company added that further investigations have revealed that the project performance of the DRC joint venture and the attendant cash flow has continued to worsen.

This, said the group, resulted “in additional after tax losses of R11.6m (included in the final results), having to be provided in addition to those accounted for at the date of the trading update on March 13, 2014”.

In those results Protech’s leadership still insisted that “there appears to be a reasonable prospect of rescuing the group, as the assets, fairly valued, exceed the liabilities”.