Case Study

CP Crane Hire Case Study

CP Crane Hire

Case Study

Objective:

In February 2021 EngagedBT was approached by an advisor to the shareholder of the CP Crane Hire group to consider placing the company/group in business rescue.  The group was in an informal restructuring process, but it appeared that the key creditors were uncomfortable with how the project was progressing.  Creditors were keen to see the restructuring process managed independently and competently, thus the group was placed in business rescue on 25 February 2021 under the control of Johan du Toit and Ian Fleming as BRPs.

 

The group had been a traditional crane hire company until circa November 2019 when it successfully tendered for projects to erect wind turbines for some large SA wind farm projects primarily in the Northern and Western Cape.  The wind farm projects and contracts were a lot more complicated and sophisticated than what the group was accustomed to, and the group soon ran into cash flow difficulties as a result of inter alia penalty clauses and disagreements with employers, contractors and subcontractors.

Issues:

  • The major creditor was Investec who was exposed to the extent of some R160m making it the largest independent creditor.  Total creditors were circa R400m.
  • The group’s assets consisted mostly of vehicles and mobile cranes; the market value of these assets was assessed to be substantial, in the region of R500m – R600m.  A major issue however was the allocation of assets as security to the group’s creditors – the BR team soon found out for instance that multiple individual assets (cranes) had been encumbered to more than one creditor as additional security for the group’s debts.  A major exercise was thus required by the BR team to unpack the asset register and identify which assets belonged to which creditor(s).  Extensive negotiations were undertaken with creditors to rearrange securities and payment waterfalls for the BR plan, in a way that would satisfy all affected persons.  

Solution:

The business rescue plan was ultimately approved and adopted on 14 May 2021, with all major creditors and the shareholders voting in favour of the business rescue plan and the BRP remuneration structure.

 

The project required extensive work from a financial, legal and operational perspective:

  • Financial – recompilation of 4 years’ of financials and recompilation of the asset register and related security from scratch; daily cash flow compilation, interrogation and verification throughout the BR; monthly reporting on all 4 companies’ results.
  • Legal – navigation through a quagmire of legal issues and negotiation of reasonable settlements with several creditors and other parties.
  • Operational – having a senior resource on site to oversee key operations and assist with the negotiation of asset sales.

 

Through extensive operational collaboration and negotiation with inter alia employers, contractors and subcontractors, the wind farm projects were managed to completion circa October 2021 with the BR team salvaging revenue and minimising costs to the best extent possible from these contracts.  Inevitably asset sales were required and the last asset sales were finalised in May 2022, resulting in all independent creditors’ exposures being settled in full (100c/Rand).  The shareholder was handed back a group with zero debt and some R100m worth of assets.

Results:

  • The business rescue project was thus successfully concluded in 15 months.