State non-payment implodes building company
Construction of a student residence by South Point Property Investments in the heart of Braamfontein, Johannesburg, has been halted after the main contractor on the project was hit by financial trouble.
The Liviero Group, which consists of five companies — Liviero Building, Liviero Civils, Liviero Mining, Liviero Drill and Blast, Liviero Plant and Liviero Energy — filed for voluntary business rescue in July.
Late and nonpayment by its government clients are reasons cited for the step.
In addition, the group’s building unit, Liviero Building, has filed for liquidation.
One of Liveiro’s appointed business rescue practitioners, Dawie van der Merwe, of BDO, said: “As business rescue practitioners, we have concluded that there is no longer a reasonable prospect of rescuing one of these five entities, namely Liviero Building (Pty) Ltd. The other four companies remain [in business rescue].”
In a sworn statement in support of the voluntary business rescue, director Luca Liviero said: “Due to the group’s exposure to government projects, Liviero Civils in particular have an amount in excess of R81-million overdue by its government clients. These late and often nonpayments have had an adverse effect on the Liviero Group’s ability to recover its group charges such as plant hire and other costs.”
Other factors cited were ongoing unrest, industrial action and section 54 stoppages in areas where Liviero Mining operates, which he said was “through no fault of our own”.
Liviero is 51% black owned, through the Masimong Group, which is headed by its controlling shareholder Mike Teke. He is also the chief executive of Seriti Resources and the former president of the Minerals Council (the erstwhile Chamber of Mines).
South Point’s chief financial officer, Johan Wheeler, confirmed that the liquidation had “driven the lack of activity on the site”.
“South Point is in the process of consulting with our legal team and determining what our actions will be in terms of its contract and, once this has been decided, we will act accordingly,” he said.
South Point is 40% owned by the Unemployment Insurance Fund through the Public Investment Corporation. According to Wheeler, private black economic empowerment shareholders have a 15% and 30% holding, with the balance of 5% belonging to staff.
Liviero’s travails are reminiscent of other construction firms that have gone under in the past because of unpaid bills on government projects. In 2012, Sanyati Civil Engineering and Construction failed after it could not collect R40-million owed to it by the Free State provincial government.