Low cost housing company sues government over slow payments

Sea Kay Holdings has turned to the courts for assistance because of slow and delayed government payments.

A multimillion-rand claim for payment has already been lodged by the Sea Kay-led Ibuyile Development Consortium in the Western Cape High Court against the government for work undertaken in the N2 Gateway project.

Gerry Holtzhausen, an executive director of the listed affordable mass housing construction company, said yesterday that documents were also being prepared for a claim of up to R100 million related to 14 housing projects in Gauteng. It is expected to be lodged at the South Gauteng High Court by next week.

Holtzhausen said Sea Kay's board had to resort to court action in terms of its fiduciary duty to shareholders.

"It's a good business if only government paid," he said.

Sea Kay has also requested an urgent meeting with Human Settlements Minister Tokyo Sexwale in an attempt to resolve the disputes outside court.

Holtzhausen said an expert that it had appointed to assess its N2 Gateway project claim had arrived at an amount of just over R133m, including interest, that was claimable.

There had been a response to its Western Cape court action involving a proposed mediation process to prove its two-year-old claim. A settlement was the key to unlocking the door to it resuming work on the project.

Cash flow in construction was imperative. Its creditors were "hanging in for 150 and ' days" for payment.

Attempts to obtain comment from Chris Vick, the special ministerial advisor to Sexwale, were unsuccessful.

Group Five chief executive Mike Upton said its contracts with state-owned enterprises were running according to the obligations of the parties but "less so at provincial level".

John Abbott, financial director at listed Wilson Bayly Holmes-Ovcon, said payment was not a problem for big contracts such as the World Cup stadiums and SA National Roads Agency projects, but there were problems with payments from provinces and municipalities.

Business Report

Afrimat chief executive Andries van Heerden said contractors were being placed under "extreme pressure" because of slow and delayed payments from government.

Posted at 09:55AM Nov 11, 2009 by Editor in Residential  |