Wednesday, 02 November 2016 01:25

Construction transformation deal held up by South African National Roads Agency Limited delay

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Government’s settlement agreement with seven major construction companies to fast track transformation in the industry is being held up.

 Mish al Emeran Equity Analyst

In an announcement on October 13, Murray & Roberts said the settlement agreement was conditional on the South African National Roads Agency Limited (Sanral) withdrawing its claims against the construction companies, after which it then became binding. But the group said on Thursday all claims against the companies by Sanral had not been relinquished.

Murray & Roberts was the last of seven construction and engineering groups that had agreed to “voluntarily” pay R1.5bn over 12 years into a transformation trust administered by the government, the companies and the South African Forum of Civil Engineering Contractors.

The government has not yet made the agreement public and companies have said they were bound by confidentiality. Economic Development Minister Ebrahim Patel said on Thursday that there was still a “formal process” taking place.

He said the department had needed to make an announcement about the agreement because it involved listed companies and he wanted to avoid insider trading. Some matters still had to be managed with a “degree of delicacy”, he said, including counter-party claims.

The parties to the agreement said earlier that it settled the companies’ exposure to potential claims for damages from identified public entities arising primarily from the fast-track settlement process launched by the competition authorities in 2011. They are Aveng, Murray & Roberts, Group Five, Wilson Bayly Holmes-Ovcon, Stefanutti Stocks, Raubex and Basil Read.

“The claims are all waived as part of the settlement. As far as we understand, Sanral made claims of between R600m and R760m against each of the construction companies,” Mish-al Emeran, equity analyst at Electus Fund Managers, said.

In a related matter, the Competition Tribunal confirmed a consent agreement on Thursday between Aveng and the Competition Commission, giving the company immunity from an administrative penalty in connection with an investigation into collusion. The matter had been delayed from last week to include companies that had not been listed in one of the contraventions detailed in the consent agreement.

source: Business Day

Last modified on Thursday, 14 September 2017 12:47

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Murray & Roberts is South Africa’s leading engineering and construction services company. It has delivered infrastructure throughout South and Southern Africa for more than 110 years and is today recognised as an international engineering and construction…