25/03/2022 - 16:01

More details emerge on WBHO Infrastructure collapse

25/03/2022 - 16:01

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A dispute with Mondium, a $202 million loss on a Melbourne road project, and an overrun at Stockyard Hill Windfarm helped sink WBHO Infrastructure, with unsecured creditors set to get $11.7 million.

More details emerge on WBHO Infrastructure collapse

A dispute with Mondium, a $202 million loss on a Melbourne road project, and an overrun at Stockyard Hill Windfarm helped sink WBHO Infrastructure, with unsecured creditors set to get $11.7 million.

But administrators from Deloitte believe it’s unlikely the company was trading insolvent prior to being caught up in the collapse of WBHO Australia and Probuild in February.

Unsecured creditors are set to receive $11.7 million from the sale of the business to SRG Global, according to the administrators' report to creditors, Business News can reveal.

Exactly what that means as a percentage of debts is not yet clear.

Trade liabilities would be about $37.5 million, administrators from Deloitte estimate.

There were also $38 million of intercompany loans, and up to $90 million of contingent liabilities.

Mondium has lodged a $5 million claim (see more below).

Employees and secured creditors are set to be paid in full, with about $3.6 million that had been owed to workers.

The company had 288 employees at the time administrators were appointed, with 44 since terminated and 19 resignations.

The remaining 225 will have continued employment under the SRG deal.

Projects


An extract from the administrator's report which shows completion of contracts at the date of appointment.

The Western Road upgrade in Victoria has received press coverage for its contribution to the collapse.

WBHO Infrastructure made a net loss of $202 million on those 10 projects, after underbidding, the administrators said.

“As of our appointment, the project was largely complete save for ongoing defect works being undertaken,” Deloitte’s administrators said.

“WBHOI assert that insufficient design work occurred by their third-party design contractor through a misinterpretation of the design specifications.

“Fixed-price contracts in an environment where costs are progressively increasing ultimately erodes margins of subcontractors. 

“While it appears, there was a 'material bidding error' in relation to WRU by WBHOI, inflationary pressure and the lack of skilled labour as a result of COVID-19 did not improve the position.”

Melbourne Water owed about $6 million for additional work outside the original project scope.

"Further, we understand that WBHOI has brought a cause of action against the design consultant in relation to WRU," administrators said.

"Our investigations are continuing in relation to this amount; however we note that this claim is approximately $58 million based on WBHOI’s books and records."

The Stockyard Hill wind farm in Queensland was also a drain, particularly in the 2019 financial year.

“Following this performance, FY21 suffered significant losses from the two western region projects of Telfer 8 and Mondium Syncline," the report said.

WBHO Infrastructure was a subcontractor to Mondium (Monadelphous and Lycopodium) for work at the Rio Tinto Western Turner Syncline iron ore project.

The company had submitted contract variations of $10 million before administrators were appointed, which was in mediation, according to the report.

Mondium has made a $5.6 million contingent liability claim, but the administrators said WBHO Infrastructure had a counterclaim now as much as $28 million.

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