Probuild collapse to hit our economy
THE collapse of one of Australia’s largest construction groups is expected to have a “knock-on effect” on the broader Australian economy.
The Probuild collapse also leaves in doubt up to $5bn in projects across the country – including the future headquarters of global biotech company CSL, the next stage of US equity giant Blackstone’s apartment development in Melbourne, The Towers at Elizabeth Quay in Perth, the 450-room W Hotel on Darling Harbour in Sydney and a 47-level apartment tower in Brisbane’s CBD.
At risk also are the futures of more than 700 WBHOA staff and thousands of contractors and subcontractors.
The South African parent company of construction giant Probuild, Wilson Bayly Holmes-Ovcon (WBHO), formally put its Australian arm into voluntary administration through Deloitte Turnaround & Restructuring partners Sal Algeri, Jason Tracy, Matt Donnelly and David Orr, who have been appointed administrators.
It is the same team appointed to Virgin Australia when it collapsed at the start of the Covid-19 pandemic.
Deloitte said it would seek to turn the company around and sell the business either in its entirety or as individual companies or groups of companies
and plans to run an advertising campaign calling for buyers at the weekend
Mr Algeri said WBHOA had been a major contributor to the construction sector and the broader economy, including as a direct and indirect employer.
“The Covid-19 pandemic has created challenging trading conditions for many businesses, and for WBHOA, which has also been impacted by certain loss-making projects,” he said.
“Our immediate focus will be to undertake an urgent assessment of the entities’ financial positions and work with key stakeholders to stabilise the business and projects where possible. We will assess options to preserve value, and engage closely with creditor groups and other stakeholders across the spectrum.”
Deloitte Australia said 18 companies within WBHO Australia Group (WBHOA) were placed into administration late on Wednesday.
WBHO also took aim at the Australian government’s “hardline approach” of managing Covid-19.
“A combination of border restrictions, snap lockdowns and mandatory work-fromhome regulations for many sectors, has had aconsiderable impact on property markets,” it said in a statement.
Insolvency specialist Jirsch Sutherland partner Andrew
Spring said it was the “sign of things to come” with external administrations set to continue to rise due to Covid shutdowns, supply problems, labour shortages, delayed projects and poorly negotiated contracts.
“Obviously there’s an immediate concern for all the employees, contractors and subcontractors associated with projects Probuild has been involved in,” he said.
“It’s probably the tip of the iceberg. The building and construction industry has always had a high percentage of the insolvency landscape and now we will see a larger level of insolvencies which in turn will have a knock-on effect to the broader economy.”