$20m bid for Pindan withdrawn hours before collapse

A $20 million bid to save construction giant Pindan Group was withdrawn 48 hours before the company entered administration, as administrators claim Singaporean owner Oxley Holdings were not prepared to support the deal.

Administrators from EY distributed a 135-page report to the group’s creditors late yesterday, outlining their investigation findings, the events that led to the company’s downfall and assessing Oxley’s recent $7.5 million deed of arrangement offer.

But the report, obtained by Business News, also sheds light on Oxley’s eleventh-hour bid to sell off the multi-disciplinary construction group before it went under.

The group’s managing director Scott Davison and executive director Tony Gerber had alluded to failed bids to secure new investment in a staff email sent in the wake of the collapse.

According to EY’s preliminary investigations, Oxley advised Pindan Group’s directors of its plan to exit its investment during 2020; prompting an off-market sale campaign for Oxley’s 100 per cent shareholding.

The plan followed Oxley’s move to full ownership of Pindan Group after cancelling around $24 million in debt, and came as the company’s financial position began declining drastically.

Just weeks after writing a letter confirming it would support all Pindan companies to remain solvent until October 2021, EY claims Oxley and Pindan Group entered into a letter of intent with two potential buyers to enter into a share sale and purchase agreement by February 15, 2021.

The identity of the prospective buyers has not yet been revealed, but it is understood the parties were Australian-based property development and funds management businesses who embarked on a joint venture to pursue the purchase and engaged a third-party private investment company to complete the transaction. 

The terms of the transaction were the payment of $27.5 million for 100 per cent shareholding in the group, the proceeds of which would be used to pay down its debts; including loans from Oxley.

The state’s hard border hindered the due diligence investigations and delayed the timing of the proposed sale.

But by March 5, 2021, the buyers had lowered the offer to $20 million; pending the completion of due diligence investigations. 

Based on its investigations, EY claims it appears Oxley were not inclined to support a sale under $25 million because it would not discharge amounts it was owed at the time. 

The buyers withdrew from the proposed sale on May 16, 2021, and 48 hours later, the group had collapsed owing secured and unsecured creditors and employees more than $97 million.

Administrators were appointed to three entities, with liquidators appointed to a further nine; leaving the business's 80 active projects, 280 staff and hundreds of subcontractors and trade suppliers in limbo.

EY has told creditors it is of the view that the quantum of the Pindan Group’s potential claim against Oxley could range from $52.25 million to $120.3 million.

The DoCA proposed by Oxley includes $4.5 million for employee entitlements, more than $1.5 million for creditors and $1 million for a release from the other subsidiaries already in liquidation.

As part of the deal, employees would be guaranteed 100 cents in the dollar on all claims, including leave, redundancy and superannuation.

Under the proposed DoCA, all creditors would be paid a minimum of $1,500 per claim before Christmas, with more funds available for large creditors to receive an additional payment.

Oxley has already agreed to pay a $17 million loan to its secured creditor Bankwest, taking the total of its commitment since its acquisition of Pindan to more than $70 million.

Administrators also flagged the possibility of a claim against Oxley for its letter of support, on the basis of misleading or deceptive conduct.

The DoCA is expected to be decided on during the second creditors’ meeting next week.

Business News is a registered creditor of Pindan in relation to a small advertising contract.