BETA Holdings, one of the country's biggest brick makers, is going into corporate rescue after production failures left it unable to service loans of nearly US$10 million.
The company's directors agreed on December 24 to put the company into corporate rescue, an action that would prevent creditors from grabbing the company's assets.
"Due to a lack of sufficient working capital to sustain production, the subsidiaries of the company are currently in financial distress.
"The subsidiaries have not produced at optimum levels since April 2023, which has adversely impacted the revenue of the entire group," the company says in a report filed with the Master of the High Court.
The company's troubles became clear in 2023 when customers suffered worsening delays in the delivery of orders. Beta said it was investing in two plants, in Mt Hampden and Melfort, hoping to increase capacity from 6 million bricks a month to 24 million a month. But thin capital has seen production fall over recent years. In 2023, the company said it was failing to pay workers at Mt Hampden due to "unprecedented challenges".
The company had taken out loans, including from banks, and is failing to pay them off. By November, was had arrears of US$1.2 million on its loans. Says Beta: "The company is therefore potentially liable, jointly, and severally, to settle the outstanding balance in the sum of US$9,620,743.25. The potential liability comes at a time when the company is not generating any revenue, which can be used to settle the claim."
The board believes the company can still be saved, and that "given the current construction boom in the country, there is high demand for products manufactured by the company".
Competition is rising in the brick business, with new, smaller and nimbler players eating away at the market share of dominant brick makers, at a time demand for bricks is strong.
Another company, Willdale, is selling idle land to raise money for a new plant, which it needs to catch up with thriving competitors. Willdale's old plants and high costs have seen it struggle to meet orders from customers.
