The construction and construction related services company also indicated that the main cash flows that the company currently receives are debtors’ payments for current and completed projects.
“Given the cash flow impediment, the board concluded that although Protech is financially distressed, there appears to be a reasonable prospect of potentially rescuing the company, as the assets, fairly valued, exceed the liabilities,” said [DATA PKH:Protech Khuthele] finance director and acting chief executive, Victor Dingle.
(READ MORE: Dingle appointed as Protech acting CEO, Page steps down)
“The board is unanimous in its decision that Protech voluntarily begin the business rescue process.”
According to the company, the Protech board of directors had been made aware that the anticipated receipt of monies from a substantial debtor could be delayed or possibly not paid in full.
This also follows demands for immediate project expenses incurred by suppliers which the company is unable to pay.
“The board is of the opinion that the voluntary rescue process will afford the directors the opportunity to develop and implement the business rescue plan in a manner that will optimise the likelihood of Protech continuing as a going concern,” Dingle said.
Protech recently reported an increase in revenue from 530.5 million rand for the six months ended August 2012 to 651.4 million rand in for the same period in 2013.
(READ MORE: Protech reports profit gain in latter part of FY)
The group’s construction segment had contributed 84 per cent of group revenue and of that, 224 million rand came from outside of South Africa.