14/08/2013 - 07:49

Gavin sought to buy Pilbara laundry

14/08/2013 - 07:49

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Gavin sought to buy Pilbara laundry
HIGH-TECH: MCM Linen’s commercial laundry facility in Karratha has been advertised for sale by expressions of interest. Photo: CBRE

The managing director of collapsed Perth building firm Gavin Construction made an unsuccessful last-ditch bid to recover a failed Karratha laundry project just weeks before appointing administrators to his own company in June.

Australian Securities and Investments Commission documents, obtained by Business News, indicate Sean Gavin agreed in May to purchase an industrial property from former client, MCM Linen, as part of a deed of company arrangement to save MCM Linen.

MCM Linen last year awarded Gavin Construction a $5.4 million contract to design and construct a state-of-the-art commercial laundry to service the resources sector in Karratha, but the $15 million venture collapsed after the company failed to secure clients.

Directors Alistair Murchison and Nick Morris placed MCM Linen into voluntary administration in December, with the company owing Gavin Construction around $2.2 million.

Mr Gavin started winding up proceedings against MCM Linen earlier this year but agreed to surrender his claims in exchange for purchasing the Karratha property at a discounted price of around $5 million.

However Mr Gavin could not secure the necessary finance to complete the purchase and the arrangement was terminated, according to MCM Linen’s liquidator, Grant Thornton partner Matthew Donnelly.

Mr Gavin’s representations to me and to the other creditors were that he was more than capable of financing the transaction,” Mr Donnelly told Business News.

“Everything that we were told and everything that he provided seemed to support the fact that he did have the ability to do it.”

It is not known whether the failed transaction contributed to Gavin calling in administrators, having traded in Perth as a family-owned business for 44 years.

MCM Linen creditors voted to have the company wound up last month following the termination of the deed of company arrangement, with the Karratha property now being advertised for sale by expressions of interest by CBRE.

Mr Donnelly said Grant Thornton had entered into a contract for the sale of the premises, which he hoped to see settled this month, with proceeds going to MCM Linen’s secured creditor, the Commonwealth Bank.

The buyer’s identity has not been disclosed but the property will not be operated as a laundry, with the equipment having already been sold separately.

The purchase price is believed to be less than the $5 million offered by Mr Gavin or interests associated with him.

ASIC documents show that MCM Linen Holdings attracted the interest of some high-profile Perth business figures, including Michael Chaney, John Bond and Delta Capital director Anthony Brennan.

Gavin Construction liquidator, WA Insolvency Solutions director Chris Williamson, said the collapse of MCM Linen was just one of several contributing factors behind Gavin Construction’s financial difficulties.

According to minutes from a Gavin Construction creditors meeting last month, creditors questioned whether Gavin Construction had traded while insolvent and expressed frustration over the company’s management.

Mr Williamson said it could be up to six months before he completed his investigations into Gavin Construction in his role as liquidator and reported to creditors.

Mr Gavin and Mr Murchison each declined to comment to Business News.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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