14/01/2009 - 22:00

Cape deals create further fallout as more competitors set up shop in WA

14/01/2009 - 22:00

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UK company Cape plc's acquisition spree in Australia in 2007 has continued to have extraordinary fallout, with three new competitors emerging in the scaffolding and formwork sector in Western Australia.

UK company Cape plc's acquisition spree in Australia in 2007 has continued to have extraordinary fallout, with three new competitors emerging in the scaffolding and formwork sector in Western Australia.

Cape has responded by taking legal action against 10 people who have left companies it acquired in order to set up new competitors.

These individuals include Darren Iannello, who was one of six former TCC Group executives to set up a WA office for major New South Wales company Giovenco Industries.

Cape has also taken legal action against Jim Anderson and eight others who left PCH Group in order to establish Modern Access Services, a joint venture with Malaga company Modern Industries.

A third new competitor in the WA market is International Formwork & Scaffolding, set up by PCH Group's former formwork director Doug Weir.

IFS chairman Bill Ryan and chief financial officer Wil Cuperus were also formerly with PCH Group.

Cape spent nearly $430 million during 2007 buying Malaga based PCH Group, Henderson based TCC Group and Melbourne company Concept Hire, which had previously bought Balcatta company Blackadder Scaffolding.

Cape is understood to have lost senior staff from all of these businesses, and the market is rife with rumours that the Blackadder business has been shut down.

Since making the acquisitions, Cape's share price has tumbled and it has failed to reach its own debt reduction target, leaving it as a takeover target.

The company advised the London Stock Exchange just before Christmas that it has received "very preliminary expressions of interest" from "a number of private equity firms".

Modern Industries managing director Andrew White said Cape had applied to the Federal Court to see Modern's tender documents because it suspected staff had used confidential information from their previous employer.

He described Cape's legal moves as "just a distracting action to delay and disrupt" a successful competitor.

Mr White cited contracts Modern has won in Thailand, for Woodside's Pluto gas project, as evidence of its commercial success.

Giovenco Industries has previously undertaken project work in WA but the opening of a permanent Perth office signals a lifting of its commitment.

The Sydney-based family company offers insulation, blasting and painting and scaffolding services, similar to the services offered by TCC Group.

Mr Iannello declined to comment on the legal action Cape has taken against him in the Federal Court.

Meanwhile, IFS announced in late December plans for a backdoor listing on the Australian stock exchange via shell company Advanced Ocular Systems.

IFS had been planning an initial public offering in October but changed its plans after the market weakened.

With backing from Singapore company Millenium Scaffolding Asia, IFS has already acquired Malaga company Access Hire.

IFS has won substantial contracts in Singapore and is working on several construction projects in Perth.

IFS will join Global Construction Services as an ASX-listed scaffolding and formwork supplier in WA.

Global was established in 2003 by Enzo Gullotti, who earlier in his career was a co-founder of PCH Group.

Mr Gullotti said Global had a strong position in the WA market, which had remained its main focus.

In November it was awarded a $24 million contract on Brookfield Multiplex's City Square office tower.

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