Ten years on from the death of its founder, BGC Australia has dramatically slimmed down.
When Len Buckeridge died in 2014, he left behind a sprawling business empire that spanned residential and commercial construction, manufacturing, contract mining and property development.
With annual revenue of more than $2 billion and about 4,000 staff, BGC Australia had for many years ranked as Western Australia’s largest private company, according to Data & Insights.
Mr Buckeridge had been the driving force in the business for 55 years and, like many self-made entrepreneurs, failed to leave behind a clear succession plan to ensure the longevity of the business.
What ensued was a series of legal disputes as family members fought to secure their piece of his estate.
Four years after Mr Buckeridge’s death, his son Sam held an extremely rare press conference to announce the business was being prepared for sale.
He explained that, through a mediation process, Mr Buckeridge’s widow, six children and eight grandchildren struck a deal to settle all disputes.
“We’ve done this collectively, and we’ve agreed a number of amendments to our father’s will,” Sam Buckeridge said.
The sale process included the appointment of independent directors, led by chairman Neil Hamilton.
Investment bank Macquarie Capital was brought on to manage the sale process and, six years later, is still working to complete the task.
In the intervening years, BGC has been a party to more drama and upheaval than at any time in its history.
This included big losses in 2022 and 2023 after BGC, like many other builders, was battered by the combined impact of COVID, a supply chain squeeze, rising costs and a housing construction boom.
Along the way, the Buckeridge family has been well looked after as BGC paid big dividends, funded from the sale of an estimated $800 million of assets (see graphic).
Property sales
The asset sales included two of its most ambitious projects.
BGC led the development of the 368-room Westin Hotel at the eastern end of Perth’s CBD in the mid 2010s.
The project was originally designed to include an office tower facing Hay Street but that has not happened.
BGC also led the development of the 224-key Aloft Perth hotel in Rivervale and the adjoining nine-storey 25 Rowe office building. Both projects provided a big boost to BGC’s commercial construction order book.
They also contributed to a big increase in the group’s debt.
The group’s 2018 financial statements show it was loaded up with $570 million of debt and total liabilities of $1.2 billion at June 30 that year.
That outstripped its total equity of $820 million. With assistance from property agency JLL, the group completed the sale of both assets in early 2019.
It reaped $200 million from the sale of The Westin and a further $100 million from selling Aloft Perth.
Later, in 2019, it sold the BGC Centre office building in central Perth to investment group Redhill Partners for another $100 million.
The big property assets were followed out the door by BGC Contracting, for an equity value of $116 million. This batch of sales in 2018 and 2019 were the simpler transactions.
They involved assets that could easily be carved out from the group. Since then, the group has sold a number of other properties, illustrating how asset rich it had become under Len Buckeridge’s leadership.
These included the office building at 20 Walters Drive in Osborne Park, sold for $55 million, and “surplus properties” sold for $73 million. Another large and most unusual transaction occurred in 2021.
ASX company Aspen Group announced it had paid $55 million for a portfolio of residential apartments from “associates” of BGC.
That term was generally interpreted to mean members of the Buckeridge family.
The portfolio comprised 514 apartments across 17 properties dating mostly from the 1970s.
What was particularly unusual was the revelation that the apartments’ occupancy rate was just 41 per cent.
Whoever owned them up to that point was clearly not motivated to maximise their rate of return. Or help Perth’s housing supply.
The sale of properties and the contracting arm left BGC with its vertically integrated residential construction and manufacturing operations, which made everything from bricks and concrete to plasterboard and windows.
BGC bolstered the manufacturing side by acquiring Midland Brick for $51 million.
BGC combined its Brikmakers business with Midland Brick to become a more formidable competitor in that market.
Group sale
In April 2022, BGC announced it was formally launching a sales process for the group after completing what it called its ‘transformation’.
“It also reflects favourable market conditions, strong demand for our products and large pipeline of work,” chief executive Danny Cooper said at the time.
“We have strengthened our balance sheet and invested significantly in our core business in the lead up to this decision.
“Each of BGC’s sixteen businesses have been transformed and are now safer, more efficient and customer focused.
“Collectively, these improvements have really strengthened our vertically integrated operating model and we are in great shape.”
The sales strategy proved ill-advised, as just four months later, the board decided to pull the business from the market.
It attributed this to “current market conditions”, which was code for dire trading conditions.
This became much clearer when the group reported a loss of $41 million for the year to June 2022.
It was not alone in struggling. Its biggest competitor, Dale Alcock-led ABN Group, also incurred a big loss in FY22.
While ABN Group bounced back with a profit the following year, BGC incurred a larger loss in FY23 of $63 million.
It took the extraordinary step of halting new house sales last year as it tried to get its residential building business under control.
Break-up sale
While the group sale has been paused, BGC has continued to sell significant parts of the business.
European building materials company Etex bought BGC’s plasterboard and fibre cement business in March this year.
The business employed 200 people and generated annual sales of $155 million.
The sale price has not been disclosed but, based on profit margins achieved by competitors such as CSR, Business News has estimated the deal was likely worth about $75 million.
BGC has also sold two business units to Mr Buckeridge’s stepson, Julian Ambrose.
Along with Sam Buckeridge, the 56-year-old Mr Ambrose was a long-serving executive director at BGC.
If any family members were to continue running the group, it would have been one of those two.
Instead, Mr Ambrose is creating his own business.
He bought BGC’s precast business last year for $23.5 million, and last month bought its commercial construction division though his company, Atlas Holdings (WA).
The latter purchase appears to have come at a favourable time for Mr Ambrose as the shakeout in the construction sector has left Perth with a shortage of builders.
The two purchases add to other interests Mr Ambrose has in the property and construction sectors.
The next step in the downsizing of BGC is the sale of the cementitious division, which was put on the market in July.
The division consists of BGC Asphalt, BGC Cement, BGC Concrete, BGC Quarries, BGC Transport and the company’s Materials Technology Centre and employs about 600 people.
The remaining parts of BGC are centred on the residential construction sector.
They include Midland Brick, BGC Housing Group and BGC Building Products, and collectively employ close to 1,000 people.
Multiple legal disputes will complicate any efforts to sell the remaining businesses.
ASX-listed Brickworks, which has shuttered its loss-making brick manufacturing operations in WA, started legal action against BGC last year alleging it engaged in predatory pricing.
In July, a class action lawsuit against three BGC Housing Group companies began in the Supreme Court of Western Australia on behalf of thousands of customers over delays in completion of their houses.
And BGC has launched legal action against Iplex Pipelines over the long-running issue of burst pipes in residential properties.
These issues mean BGC will continue to be in the news, even as the business shrinks.
