16/03/2004 - 21:00

Consolidated: strange days before the fall

16/03/2004 - 21:00

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Consolidated:  strange days before the fall

The recent collapse of Consolidated Constructions has its share of corporate mystery and intrigue, as Mark Beyer reports.

FRIDAY February 27 was a dramatic day at the offices of Consolidated Constructions.

It was the last working day before the company went into administration, yet it’s understood that, at 4.45pm, managing director Steven Yovich was personally signing cheques for hundreds of thousands of dollars.

In fact, the company had taken the extraordinary step of phoning long-suffering sub-contractors that morning and told them to come into the office to collect their money.

There was a queue of half a dozen people waiting for cheques when Firemain director Mark Batten arrived.

But all Firemain got for its trouble was a bounced cheque, because the directors of Consolidated put the company into the hands of administrator Gary Anderson on Tuesday March 2, after the long weekend.

Big business collapses always attract mystery and intrigue, and Consolidated is no exception.

The company received some very big inflows in the weeks prior to its collapse, apparently enough to ensure its bank, the ANZ, and major corporate suppliers received most, if not all, of the money owing to them.

It was the smaller operators who copped it in the neck.

Karratha-based Carr Civil Contracting, owed $1.6 million and now in the hands of administrator Simon Read of PPB, could take the biggest hit.

Carr was the principal sub-contractor on the recently completed $7.6 million upgrade of the Port Hedland-to-Marble Bar road.

The tragedy of Carr’s situation is compounded by the fact that Main Roads made its final $1.2 million payment to Consolidated just a few days before it collapsed.

Carr hasn’t seen a cent of that money, despite doing all the hard work.

A Main Roads spokesman said Consolidated had paid all money owing to sub-contractors up to the end of December, which was the final cheque prior to Main Roads making its payment.

While Carr is continuing to trade, Pinjarra-based Day Contractors, which was working on three Consolidated projects, has ceased trading after being put in the hands of administrator Ian Francis of Taylor Woodings.

Remarkably, some of Consolidated’s biggest debts date from the David Jones refurbishment, which was completed two years ago.

Downer RML, Envar Engineers and Contractors, Firemain and Ultrafloor & Precast Technologies were collectively owed more than $2.5 million from the DJ’s project, which ran over time and over budget.

Consolidated spent most of the past two years battling the former owners of the David Jones property over who would pay for the blowout.

In October, Consolidated reached a mediated settlement with the former owner, Bellenvale Pty Ltd, a company jointly owned by Melbourne property group MAB Corporation and investment group Babcock & Brown.

Consolidated had reportedly been seeking $6.5 million but ended up settling for $2.3 million, though it took a further four months for Consolidated to get the money, on February 5.

The reduced payment was a blow not just for Consolidated but also its sub-contractors, who had repeatedly been assured Consolidated had a strong legal case and was bound to win.

The subbies ended up accepting a negotiated settlement, believed to between 25 cents and 30 cents in the dollar.

While most of the DJ’s sub-contractors have only a bounced cheque to show for their troubles, Envar Engineers and Contractors actually received its money about one month ago after launching legal action.

Consolidated’s current contracts include the Gosnells civic centre (worth $11.3 million), new train stations at Gosnells ($6 million) and Armadale ($5 million) and an expansion of Osborne Park hospital ($3.8 million).

It is also working on the Sorrento Beach redevelopment and recently completed the Hemisphere Apartment project, near the Sheraton Hotel.

The company’s problems included a running battle with the militant CFMEU, which was allegedly intimidating contractors on three of its projects.

Consolidated had instituted legal action against the union, but the only likely outcome is that law firm Jackson McDonald has joined the long list of unsecured creditors.

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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