22/11/2018 - 12:53

RCR into administration

22/11/2018 - 12:53

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RCR Tomlinson, which grew rapidly to be one of Australia's largest engineering contractors with annual revenue of $2 billion, 3,400 staff and multiple contracts in WA, has been placed into administration after failing to secure new funding.

RCR into administration
RCR holds a number of solar farm contracts.

RCR Tomlinson, which grew rapidly to be one of Australia's largest engineering contractors with annual revenue of $2 billion, 3,400 staff and multiple contracts in WA, has been placed into administration after failing to secure new funding.

This followed a difficult few months, which included a major cost blowout at two solar projects.

The company made an announcement to the ASX this morning, saying it had been placed in the hands of administrator McGrathNicol.

“Further to the company’s trading halt and announcement on 12 November 2018, the company has not been able to secure additional funding,” RCR said.

“As a result, the boards of the group companies met and resolved to appoint administrators.

“The administrators will make further announcements to the market and will be in communication separately with creditors and other stakeholders.”

RCR holds a number of contracts in Western Australia, including a $60 million EPC contract for the Greenough River solar farm, which was awarded in April.

It also holds over 30 contracts with the Water Corporation totalling about $25 million, having purchased the engineering and construction services branch of the utility for $10.4 million in 2015.

About $20.6 million of the Water Corp contracts have already been invoiced and paid. 

Water Minister Dave Kelly said he was aware of this morning's announcement.

“We are assessing the impact that this may have on the Water Corporation’s operations," he said. 

RCR Tomlinson supply Water Corporation with switchboards critical for the operation of pumping infrastructure around the state.

“This unfortunate situation is another example of how privatisation can often end up with unintended consequences.

“When the previous government privatised this branch, the Water Corporation employees in this branch were transferred to RCR Tomlinson. For their sake, I am hopeful this situation can be resolved quickly.”

Additionally, the company has contracts with Fortescue Metals Group and Woodside Petroleum, along with lithium miners Pilbara Minerals and Talison Lithium.

The announcement comes after a tumultuous period for RCR, which culminated in the contractor being served with a shareholder class action last week.

RCR’s share price fell by more than 60 per cent in August following a cost blowout at two solar projects in northern Queensland.

The cost overruns included a $57 million write-down at one of its projects.

The contractor also announced a $16.1 million loss for the 2018 financial year and a $100 million capital raising to help cover the cost blowout.

Long-serving managing director Paul Dalgleish resigned in the midst of the investigation into the project.

More recently, on November 7, chief financial officer Andrew Phipps resigned from the company.

In the wake of the cost overruns at the solar project, RCR had signalled its intention to focus on less risky ‘alliance’ style contracts rather than engineering, procurement and engineering contracts, where the contractor bears more risk.

Shares in RCR last changed hands at 87 cents each.

 

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