01/06/2017 - 13:35

McGrath Modular to be shut down

01/06/2017 - 13:35

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Wangara-based building company McGrath Modular is being shut down after it was ensnared in problems associated with its Queensland owner and hit by weak market conditions in regional Western Australia.

McGrath Modular to be shut down
Onterran will wind down its McGrath Modular business.

Wangara-based building company McGrath Modular is being shut down after it was ensnared in problems associated with its Queensland owner and hit by weak market conditions in regional Western Australia.

McGrath has been a major player in modular builing in WA over many years and generated revenue of $29.8 million in the year to June 2016, but currently has just two houses under construction.

Brisbane-based Onterran, formerly known as Nomad Building Solutions, announced late yeserday it would wind-down the McGrath business, one month after its Queensland subsidiary Bloomer Constructions was placed into administration.

“Modular construction market conditions in Western Australia are extremely difficult,” Onterran said in a statement.

“McGrath’s trading difficulties were recently compounded by the withdrawal of its home warranty insurance facility, which is necessary to carry on a residential construction business in WA.”

Onterran said this issue arose due to McGrath’s association with Bloomer.

“Consequently, the board has resolved to cease all activities and wind down the McGrath business,” Onterran said.

“Contracts for two residential homes are expected to be completed in the coming weeks, at which point all work on hand will be completed.”

Onterran had been trying since February to sell the McGrath business, so it could focus on a newly acquired resort business on the Gold Coast.

It said in February that falling property valuations in WA mining towns had been a major problem for the business.

"Whilst mining itself is clearly improving, both valuation and oversupply issues in regional WA make profitable trade in even the medium term unlikely."

This was reflected in McGrath's trading performance, with earnings before interest, tax, depreciation and amortisation of just $300,000 in FY16 and an EBITDA loss of $300,000 in FY15.

McGrath's last big win was a $25 million subcontracting deal with Pindan signed in August 2015 for the supply of 50 modular houses in Onslow.

Onterran shares have been suspended since February.

 

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