Construction pain continues as St Hilliers placed in voluntary administration after funding failure
Wednesday, May 16, 2012/
The construction industry downturn continues, after Sydney-based building group St Hilliers Construction announced this morning it had been placed in voluntary administration because its funding had run out.
The construction industry has suffered some of the highest insolvency rates when compared to other sectors, with the continued downturn in home building adding to the turmoil.
The collapse also comes as building experts say it will take a few months for interest rate cuts to flow through to SMEs.
St Hilliers Construction, which is the construction arm of the St Hilliers Group, announced it had appointed Trent Hancock and Michael Hird of Moore Stephens as voluntary administrators. Both were contacted this morning, but a reply was not available prior to publication.
The company employs about 350 people.
The business said in a statement this morning that an appointment wouldn’t affect the St Hilliers Property group, which is responsible for funds management and property development.
However, it did say that an associated company, St Hilliers Ararat, is part of a consortium contracted to help build the $350 million expansion of Ararat Prison.
St Hilliers Ararat has now been placed in liquidation, and St Hilliers Construction is in voluntary administration due to its exposure under guarantees for St Hilliers Ararat’s debt.
“Negotiations over several months between the Ararat Prison equity investors and its bankers in conjunction with the State of Victoria have failed to reach a definitive agreement for additional funding of approximately $150 million,” it said.
The company said it could not allow debts to be incurred without sufficient funding and, as a result, it needs to stop work on the Ararat project and place the company into voluntary administration.
Executive chairman Tim Casey said in a statement the action was “very regrettable”.
“We have over a number of months explored and exhausted all possible avenues to recapitalise the construction business and find a solution to the significant cost and time overruns on the Ararat Project. Unfortunately a solution was not possible under the current regime.”
“We will now work actively and constructively with the administrator and all stakeholders to continue all viable projects and to find a way to restructure the construction business going forward. For the rest of the St Hilliers Group it remains business as usual.”