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Kpone Gas- and Oil-fired combined cycle EPC power plant update and continuation of cautionary announcement
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’)
KPONE GAS- AND OIL-FIRED COMBINED CYCLE EPC POWER PLANT UPDATE AND
CONTINUATION OF CAUTIONARY ANNOUNCEMENT
As announced on 6 December 2018, Group Five’s client Cenpower instituted a claim of
US$60,5 million and a written demand to the Group’s bank guarantee providers requesting
that an amount of US$43,8 million of the US$60,5 million claim be paid to the client.
This claim of US$60,5 million represents the client’s evaluation of the costs to be incurred to
complete the works on the contract, as well as amounts relating to the recoupment of
estimated losses and damages the client believes it incurred. The Group strongly disputes the
amount claimed and the demand for its payment, as the client themselves confirmed that the
construction on the plant was complete, with only testing and commissioning to be performed.
As an update, Group Five informs the market that the demand of US$43,8 million was paid to
Cenpower by the Group’s guarantee providers. Payment was made on the basis of the legal
requirements of on-demand bonds and not on the merits of the contractual claims presented
by the client.
In terms of the contract, any amount the Group will be held liable for (and/or entitled to) needs
to either be agreed between the parties or determined through the dispute resolution
mechanism in the contract prior to payment thereof. This demand has not been independently
determined and does not reflect the counter claims the Group is legally entitled to and is
pursuing.
The Group’s financial partners and lenders have confirmed their support in managing any
potential liquidity event. This includes lenders agreeing to abide by the creditors’ standstill
agreement, established when the Group entered into its Senior Bridging Facilities Agreement.
The standstill agreement imposes limitations on the standstill creditors to take enforcement
action against the Group. Further terms and conditions of this support, including the terms of
repayment of any debt, are being finalised with the lenders, thus supporting the Group’s
liquidity status.
In terms of the contractual process, the Group will continue to progress its contractual rights
and entitlements for payment of all amounts due and owing under the contract, including the
recovery of delay damages (paid in terms of the guarantees) and claims against the client.
This includes a submission to the International Chamber of Commerce (ICC) in Paris for the
resolution of a dispute through expert proceedings, which is a considerably quicker process
for resolution of disputes than arbitration. Good progress has been made in this regard.
Cautionary announcement
The cautionary announcement released on 30 November 2018 remains in place as the above
may have a material impact on the price of Group Five’s securities. Shareholders are advised
to continue to exercise caution when trading in the Company’s securities until a further
announcement is made.
11 December 2018
Sponsor
Nedbank Corporate and Investment Banking
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