Beleaguered West Australian engineering company Forge Group has been placed in voluntary administration, following weeks of trading halts and profit deterioration announcements.
Reports suggest the administration was prompted after ANZ bank withdrew its support yesterday.
In a statement yesterday Forge told investors “its financiers have withdrawn support for the company”.
Forge employs 1753 staff in Australia, predominantly in its construction division and a further 814 people overseas.
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Forge company secretary Glen Smith said it was considering options for a possible restructure of the company, in a statement to the Australian Securities Exchange yesterday.
Administrators Martin Jones, Andrew Saker and Ben Johnson from Ferrier Hodgson are working with Forge, while receivers and managers Mark Mentha and Scott Langdon from KordaMentha have also been appointed.
The collapse of the company comes despite it having $1.5 billion in future projects scheduled, of which it predicted $600 million worth would be completed.
Forge had previously warned shareholders in January 2014 it anticipated a pro-forma EBITDA loss between $20 million and $25 million.
On November 28 last year the company first signalled its financial difficulties, announcing a $127 million profit write-down on its Diamantina Power Station and West Angelas Power Station.
Forge had come into these contracts after acquiring CTEC in mid-2012 for $38.6 million.
At the time ANZ had committed to funding Forge to continue trading and cover its liquidity challenges.
Since this first announcement Forge shares have fallen from $4 to around 91.5 cents before being placed in a trading halt yesterday. They had previously been trading as low as 50 cents.
In a statement released yesterday Mentha said the receivers and managers would move quickly to assess the viability of Forge’s Australian business on a project-by-project basis.
Mentha said the international businesses in the Forge Group, Taggart and Webb Groups will be sold separately.
Taggart Group had been acquired by Forge Group in July last year for $US40 million.
SmartCompany contacted the administrators, but received no comment prior to publication.
Forge has a number of construction and engineering projects with large mining companies such as Rio Tinto, BHP Billiton and Fortescue Metals.