Construction group Murray & Roberts (M&R) reported on Friday that it has reached an agreement in principle with a prospective buyer of its Cape Town Iron & Steel Works (Cisco) steel mill, in the Western Cape.

The identity of the buyer was not disclosed, nor was the precise composition of the assets that would be sold, with M&R also housing a reinforcing bar (rebar) distribution network.

CE Henry Laas said on Friday that the group was unlikely to meet its second internal target for completing the noncore disposal, which had been set for June 30. The JSE-listed group initially set the target for closing out the sale as the end of 2011.

In late 2010, M&R indicated that it was planning to dispose of Cisco as a priority, having earlier initiated a programme to close or dispose of its underperforming assets.

Cisco is an electric arc furnace melt shop and reinforcing steel rolling mill and the curtailment of production from the facility, together with the failure of a furnace at ArcelorMittal South Africa’s Newcastle mill, in KwaZulu-Natal, led to serious regional rebar shortages in 2011.

“Currently, we do have agreement in principle with the prospective buyer,” Laas reported.

He added that he expected to be in a position to confirm the sale before the group reported its year-end results, scheduled for August 29.

“It took longer than what we had anticipated, but it is under way,” Laas said, describing the potential transaction as being “very far advanced”.

The disposal formed part of the group’s three-year recovery and growth plan, with the 2012 financial year having focused primarily on the recovery aspects of that strategy.