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Group Five's business rescue plan will be executed in two phases and potentially save 3 000 to 3 500 jobs.
This is according to a document released by business rescue practitioners on Friday.
The rescue plan further entails restructuring, disposal of some subsidiaries, and "aggressive" cost cutting.
While jobs will be preserved, the document said, ongoing retrenchment processes are expected, given the company's financial distress and the inevitable winding down of its divisions.
Group Five, whose main operating subsidiary is Group Five Construction, was once valued at as much as R8.2bn. It filed for bankruptcy protection in March, having been hit by significant financial losses. It was reported at the time that this placed some 8 000 jobs at risk.
Group Five was one of several South African building companies to enter business rescue this year. Its listing on the Johannesburg Stock Exchange was suspended.
High debt, too little cash
Business rescue practitioners Peter van den Steen and David Lake said Group Five's financial distress was characterised by "unsustainable debt, coupled with significant projected negative cash forward from operations".
According to the document, Group Five's financial records for the period ending February 28, 2019 show that its liabilities exceeded its assets by some R1.5bn.
"Returning the company to solvency in its current structure would not have been possible without the injection of a significant sum of new equity capital," the document said.
Limiting job losses
It added that the rescue plan would help to limit job losses, which would be done through restructuring or sale of Group Five subsidiaries, operating businesses or contracts to new owners. This is consistent with news in May that it had put three of its biggest subsidiaries up for sale, as it attempted to recoup financial losses.
Group Five also has a number of unfinished construction projects, the document said.
The first phase of the rescue plan, which will involve the payment of creditors, is expected to be completed around the end of the first quarter of 2020.
The second phased will deal with matters which go beyond the payment of creditors and will lead up to the termination of business rescue proceedings.
The rescuers said industry experts had indicated that the liquidation process of the company would have taken five to ten years to complete. However, the current process would be wrapped up more quickly.
The company incurred financial losses of approximately R800m for the year ended June 30, 2017, and further losses of R1.3bn in the year to June 2018.
