“Jaw-dropping”: Construction giant collapses just months after raising $100 million in capital
Friday, November 23, 2018/
One of Australia’s largest publically listed construction companies RCR Tomlinson has collapsed just a few months after raising over $100 million from investors, with the company blaming an inability to secure additional funding as the reason for the business’ collapse.
RCR, based in Perth, is the company behind a number of major infrastructure projects across the nation, specifically in the mining and energy sectors. It was most recently working on two solar farms in Queensland, for which it was required to secure the additional $100 million of capital after the costs for the projects ballooned to over $50 million.
The business was placed into a trading halt on November 12, and the business was suspended from official quotation two days later at the request of the directors. A week on from that announcement, the company’s suspension was extended and it revealed a class action had been filed against it by shareholders.
Administrators McGrathNicol have been appointed to manage the business’ voluntary administration, saying in a statement to the market it was assessing the business and “urgently seeking funding” from RCR’s financiers.
“The Administrators will work closely with RCR’s employees, suppliers and customers to quickly stabilise operations and to determine the appropriate strategy for the business,” the administrators said.
“A sale process will be commenced immediately.”
The first creditors meeting for the business will be held on December 3, and it is expected some parts of the business will be sold off as a result of the collapse. RCR currently has around 3,400 staff, whose future is currently unclear.
RCR Tomlinson was founded in 1898 and is one of Australia’s most well-established construction companies, with government and private sector clients including Transport for NSW, Metro Trains Melbourne, the Water Corporation of WA, Sydney Water, and Pilbara Minerals.
Speaking to SmartCompany, co-founder of credit reporting agency CreditorWatch Patrick Coghlan said the collapse was “jaw-dropping”, with shareholders and market watchers left with a number of questions.
“The company had just raised $100 million, which requires an immense amount of due diligence from banks, accountants, auditors, and the board. Everyone thought they had a fantastic looking balance sheet, and if they’d needed more capital they would have asked for more,” he says.
“For them to go into administration three months later is absolutely shocking.”
Coghlan says with class actions already in the pipeline, the company’s directors are likely to be “nervous”, with the co-founder believing something may have been missed during the business’ recent due diligence and capital raising.
“I wouldn’t be surprised if something untoward had gone on here. It’s not like there was a flood or any bad weather which could have affected the progress of their solar plants, and the business is not a new or risky one,” he says.
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