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GROUP FIVE LIMITED - Group Five Finalises Agreement with Funders and Obtains R650 Million Secured Senior Bridge Funding

Release Date: 16/05/2018 09:15
Code(s): GRF     PDF:  
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Group Five Finalises Agreement with Funders and Obtains R650 Million Secured Senior Bridge Funding

Group Five Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1969/000032/06)
Share code: GRF ISIN: ZAE000027405
("Group Five” or “the Company” or “the Group”)

                              SECURED SENIOR BRIDGE FUNDING

Further to the SENS announcements released on 29 March 2018 and 12 April 2018 advising
shareholders that Group Five had signed a term sheet with a funding consortium for R650 million of
short-term bridge funding, the board of directors is pleased to announce that Group Five and its
subsidiary Group Five Construction Proprietary Limited (“G5C”) have now concluded and entered into
a senior bridging facilities agreement (“Bridge Agreement”), and a creditors standstill agreement
(“Standstill Agreement”) with regards to this secured short-term bridge funding.

1. The Bridge Agreement includes the following salient terms:

   1.1. The R650 million secured bridge funding (“Bridge Funding”) is for a 12-month period and was
        obtained from a consortium of local banks (“the Consortium”) to address the mismatch
        between the short-term funding needs of the Group, mainly as a result of a declining South
        African construction order book, as well as cash funding required to complete the Group’s
        Kpone contract in Ghana, and the rate at which claims, debtors and non-current assets could
        be realised to fund outflows.

   1.2. The Bridge Agreement contains financial covenants and events of default, typical for
        transactions of this nature.

   1.3. The Bridge Funding terms includes a structuring fee and time-variable interest rates at market-
        related pricing as is customary for financing transactions of this nature.

   1.4. The Bridge Agreement includes mandatory prepayment triggers customary for debt financing.
        G5C may also voluntarily pre-pay the loan without penalty. Therefore, the Bridge Agreement
        is not a “restrictive funding arrangement”, as such term defined in the JSE Limited Listings

   1.5. The Bridge Funding security, which secures both this new facility and existing lending
        arrangements, is comprised of a pledge and cession in security by the Group of its rights, title
        and interest in:
            • its Manufacturing assets,
            • its European Investments (namely its service concessions investments) and
            • its European operations & maintenance businesses.

2. The Standstill Agreement includes the following salient terms:

   2.1. Group Five has executed a Standstill Agreement with the Consortium and an insurance
        partner (the “Standstill Creditors”) to principally ensure that the Standstill Creditors do not
        terminate any of their existing facilities or cancel or reduce any available commitment or limit
        in terms of their existing facilities, and to provide a temporary suspension of any enforcement
        action under the existing funding documents.

   2.2. The standstill period shall terminate on the earlier of the discharge date of the Bridge Funding
        or any event of default. The discharge date is expected to be 12 months from 11 May 2018.

The Group also continues to improve its free cash position through the recovery of long-outstanding
debtors and the conversion of non-current assets and other cash-enhancing initiatives. These cash
recoveries and initiatives are expected to provide an enhancement to the Group’s cash position over
an 18-month period. As announced in the Group’s interim results published on 12 April 2018, some
initiatives have already converted into free cash.

As disclosed to the market at interim results time, Group Five does not believe it is prudent to rely
solely on debt and would therefore prefer to approach shareholders to discuss recapitalisation options
and replacement of its debt as soon as practically possible.

The repayment of the Bridge Funding through shareholder funding options such as a potential rights
offer or shareholders’ loans would prevent the unintended disposal of core Group assets, providing
the Group with sufficient time to stabilise and further de-risk the Construction businesses prior to any
transaction in this segment in terms of the agreement reached with the government of the Republic of
South Africa (“the VRP”) on transformation in the construction sector.

The Group will, in due course, engage with shareholders and present various options for their
consideration to identify the best course of action for financial support.

16 May 2018

Corporate Adviser and Transaction Sponsor
Tamela Holdings Proprietary Limited

Werksmans Attorneys

Nedbank Corporate and Investment Banking

Date: 16/05/2018 09:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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