CRL in deal talks amid trading halt
City Rail Link bosses knew Australian infrastructure company RCR Tomlinson was in financial difficulty when it chose it as a contractor for New Zealand’s biggest infrastructure project.
RCR Tomlinson, which is listed on the Australian stock exchange, was placed into voluntary administration on Thursday, with its administrators McGrathNicol immediately putting the 120-yearold company up for sale.
Its New Zealand subsidiary, RCR Infrastructure (NZ), which is not in administration, was awarded a $7.5 million contract to deliver part of the City Rail Link (CRL) with joint venture partner WSP Opus.
The contract, still in its design phase, is due to start in June 2019 and finish in 2024.
In September RCR reported an A$16.1 million (NZ$17m) loss for the year to June 30 and had a A$57m write-down for one of its projects.
It also put itself in two trading halts, one in July for a capital raise and another in November pending the release of an announcement regarding its 2019 profit.
Before any announcement was issued, administrators took over.
The CRL is one of New Zealand’s biggest transport projects, costing $3.4 billion. The 3.4-kilometre underground train line will connect four stations in central Auckland.
Britomart and Mt Eden stations will be redeveloped and new stations will be built at Karangahape Rd and Aotea Square.
CRL chief executive Sean Sweeney said there was no impact on RCR’s New Zealand operations, but news of the parent company being in administration was concerning, and he was working on a contingency plan.
The C7 contract is an important one. It will deliver all of the underground rail systems for the project including rail tracks, signalling, overhead lines, control systems and room fit-out, communications and building works.
Sweeney said CRL was negotiating with RCR Tomlinson during its trading halt in July.
During the trading halt Sweeney visited RCR Tomlinson’s executives in Australia and was told all of its problems were related to its solar business, not rail, he said.
Sweeney said he felt confident at the time to forge ahead with the deal as RCR Tomlinson appeared to have identified a problem and resolved it.
RCR’s share price has been tumbling since September 2017 from A$3.41 to A87 cents on Thursday.
At yesterday’s meeting an agent for the administrators said they were working to secure more bank lending to help speed up the process of determining the value of the profitable parts of the business, CRL said in a statement.
The contract between CRL and RCR was announced in October.