Subcontractor in battle for survival

A DISPUTE over several claims related to work done at Eskom’s new Medupi power station has resulted in a subcontractor lodging an urgent High Court application for the liquidation of listed construction group Basil Read.

The application lodged by Baarata Construction & Projects is to be heard in the North Gauteng High Court in Pretoria tomorrow.

Andiswa Ndoni, the executive officer responsible for corporate affairs and governance at Basil Read, confirmed on Friday that the group would be defending the application.

The application results from Basil Read not paying Baarata R4.2 million, which the close corporation claims was owing.

However, Ndoni said the amount Baarata claimed was due to them was subject to the contractual claims process and was dependent on Basil Read’s claim against Eskom being successful.

“Baarata has, in effect, a backto-back claim with Basil Read and Eskom. If the Basil Read claim with Eskom is adjudicated in our favour, the claim with Baarata will be awarded in their favour. Until such time as Eskom has adjudicated the Basil Read claim, we do not believe that a legal liability exists. Until such time as a legal liability has been established, Basil Read is not liable to pay,” she said.

Attempts to obtain comment from Baarata were unsuccessful.

However, Moneyweb reported that Martin Nel of Baarata claimed that Eskom had already made payment to Basil Read.

The claims relate to the installation by Baarata of ceiling boards and partitions in some buildings at the Medupi power station and result from labour disruptions in 2013 that caused the extension of the contract.

Ndoni said Basil Read had received the first urgent application from Baarata on August 19, with the court date set for August 25.

Removed from roll

However, Ndoni said Baarata’s attorneys contacted Basil Read on August 24 to advise them that the matter was being removed from the roll. The application was removed from the court roll on August 25 and Basil Read was awarded costs, she said.

Ndoni said the second application was delivered to Basil Read’s offices on August 28, also on an urgent basis, and was scheduled to be heard tomorrow.

She added that Basil Read acknowledged that the construction sector as a whole was under pressure at the moment, with many companies experiencing liquidity constraints. This was particularly noticeable in the small to mid-tier contractors.

“Basil Read is, however, bound by the contractual process, as all construction companies are, and it would therefore be unadvisable for the company to pay claims that have not yet been adjudicated.

“We are working closely with Eskom to resolve outstanding contractual matters. As a gesture of good faith, Basil Read had offered to advance funding to Baarata to assist them to resolve the amounts due and payable to Sars (SA Revenue Service) to allow them to continue trading. This offer was rejected,” she said.

Moneyweb reported that Nel said in an affidavit that Baarata was experiencing “a dire cash flow crisis” and was unable to pay R894 000 that was owing to Sars, which had obtained judgment against the close corporation.

City Press reported in 2013 that smaller contractors on the Medupi construction project were claiming their businesses may not survive the incessant delays and recurring chaos on the site.

Basil Read shares on the JSE on Friday ended 1.23 percent lower at R4, which valued the company at R527 million.