Stefanutti Stocks [JSE:SSK] says it has shut the majority of its operations in the countries where lockdowns have been instituted in response to the Covid-19 outbreak.
JSE-listed Stefanutti is one of South Africa’s largest construction companies. Its shares have lost over 90% of their value in the past year. Its stock was trading at 17c per share on Wednesday afternoon.
“Most governments in the countries in which Stefanutti Stocks operates have either announced lockdowns, states of emergencies or implemented various regulations and directives which impact the manner in which companies do business,” the group said in an update to shareholders on Tuesday.
“The group has consequently temporarily closed the majority of its operational sites in compliance with applicable regulations.”
While the civil construction industry improved slightly towards the end of 2019 due to higher activity, according the FNB/BER Civil Confidence index, the coronavirus is expected to deal a heavy blow to the sector which was already under strain from low economic growth and depressed spending on infrastructure. In March 2019 Group Five, one of SAs key players, filed for bankruptcy.
Domestically, most of Stefanutti’s projects have stopped, with the exception of certain mining services projects that have been deemed essential in terms of government regulations.
“In Botswana and Eswatini projects have been stopped with the exception of one project each which are deemed essential, whereas in Mozambique only one project has been stopped, and in Zambia and the UAE all projects are operational,” the notice read.
The group said that the financial impact of Covid-19 on its business can not yet be determined.
The construction group’s stock has taken a beating in recent months. In January Sanlam Investments cut its shareholding by half – from about 10% to under 5%. Stefanutti’s stock bled 20% as a result, as Fin24 reported at the time.
Then in February, PSG Asset Management similarly slashed its holding in the group by half from about 9% to just under 4%, causing a share price drop of nearly 13%.
The firm was named in a Daily Maverick report published in November 2019, as one of four contractors at Eskom’s Kusile power station that allegedly made substantial payments to a business, Babinatlou Business Services – whose account was used as a slush fund to benefit Eskom officials.
Stefanutti has maintained that payments made to Babinatlou were not for “illicit purposes”, as Fin24 reported.
“The payments to Babinatlou were made purely for the purpose indicated and importantly were not made for any illicit purposes involving any Eskom executives… Insofar as Stefanutti Stocks has been able to ascertain, the monies it paid were utilised for their intended purpose,” it said in January.