The liquidity squeeze being experienced by Eqstra has intensified, with the listed leasing and capital equipment group encountering difficulties in finalising the proposed sale of excess assets it operated in Mozambique on the Benga coal mining contract to client Minas de Benga Limitada (MBL).
The group now plans to sell on auction these assets and mining equipment in South Africa held for sale for a minimum of ZAR802.9-million over the next two years. On Monday 6 June, Eqstra said that it was imperative the assets be sold to improve the group’s liquidity position.
“Eqstra is in a tight liquidity position and the cash from the disposal would greatly alleviate the constraint. The proceeds of the disposals will be utilised to repay debt”, it said. Eqstra said it has already received an expression of interest for some of the local excess assets through auction houses, which is subject to shareholder approval. It said the proposed sale of the excess assets was in line with the group’s stated strategy to reduce its exposure to the mining industry.
Eqstra previously said its wholly owned subsidiary Eqstra Mozambique Limitada had signed a memorandum of intent with MBL to purchase the mining equipment used by Eqstra at the Benga coal mine. This contract came to an end in December. However, Eqstra said on Monday that the Benga excess assets were largely mine specific and throughout the contract period the intention was to either sell the assets to the mine owner at the end of the period, extend the contract mining agreement or find alternative contracts or buyers for the equipment.
Eqstra said it became clear towards the end of the contract term that the mine owner had some liquidity constraints based on the low coal prices and the last option was most likely to succeed. The group said it had engaged MBL for a sale but to date this had not been successfully concluded, which had led to the decision to consider alternative buyers for these assets. Eqstra said reputable auction houses have been approached, a list of units with each item’s floor price have been provided and the assets would be sold at best, but not below the floor price. “Given the nature and the size of the equipment, it is unlikely the units will all be sold in one transaction and multiple transactions over a period of time (24 months) are envisaged”, it said.
Source: Independent Online