Property and construction giant Probuild in administration leaving major projects in the lurch

Property and construction giant Probuild in administration leaving major projects in the lurch

The Ribbon on Darling Harbour is one of the Probuild projects left unfinished (photo by Camilla Jansen).

A group of Australian property and construction companies responsible for hundreds of employees and thousands of contractors has gone into administration today, leaving projects unfinished at construction sites nationally.

Deloitte confirmed the news this morning that Wilson Bayly Holmes - Ovcon Australia (WBHOA), a group of companies underneath South African-listed parent company Wilson Bayly Holmes - Ovcon Limited (WBHO) were placed into voluntary administration as of 10pm last night.

This means three major Australian construction and project management businesses Probuild, Monaco Hickey and WBHO Infrastructure, as well as their employees, contractors and projects are facing an uncertain future.

Of the three, Probuild is one of the largest and most recognised brands, having been behind the construction of major builds in Australia including the fitout of the new Victoria Police Headquarters, the revitalisation of Queen and Collins in Melbourne’s CBD, and The Star’s suite tower for its property on the Gold Coast.

With Probuild in administration, a number of major construction projects have been left in the lurch too, including The Ribbon in Sydney’s Darling Harbour, Greenland Centre - to be Sydney’s tallest residential tower, and a residential project on the Brisbane River - 443 Queen Street.

As reported by The Australian, workers were seen pulling equipment and tools from Cbus Property’s Queen Street project yesterday, while 9News reported subcontractors and tradesmen walked off the site of Melbourne’s O’Connell Street, where Probuild is constructing a property for biotech giant CSL (ASX: CSL).

443 Queen Street, Brisbane

 

Originally established in Western Australia in 1987, WBHOA is today headquartered in Melbourne, with offices also in Sydney, Brisbane and Perth. It directly employs approximately 750 people.

In a statement, a company spokesperson confirmed the appointment of Deloitte and said it was "abruptly informed" that parent WBHO was pulling all financial support.

"We are caught up in a set of circumstances not of our making," the Probuild spokesperson said.

"We are working closely with the administrator on a number of plans to protect our clients, subcontractors and employees.

"We have several options for raising the necessary capital to continue as a premium Australian building company. These will all be pursued."

Deloitte turnaround & restructuring leader Sal Algeri said the administrators will attempt to preserve value and commence a sale and recapitalisation process in order to secure a new owner for the business.

“WBHOA has been a  major contributor to the construction sector and the broader economy, including as a direct and indirect employer,” Algeri said.

“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.

“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.”

The appointment of Deloitte comes after parent WHBO announced yesterday it was pulling all financial support to the Australian arm, noting it was bleeding money because of COVID-19 restrictions here.

“The Australian construction environment has also become increasingly competitive and contractual, in our view, the potential risk on large mega-building projects outweighs the current margins available,” WHBO said.

“The Australian government’s hard-line approach of managing Covid-19 through a combination of border restrictions, snap lockdowns and mandatory work-from-home regulations for many sectors, has had a considerable impact on property markets as well as other industries such as the leisure industry.

“The Company has been monitoring the trading operations of WBHOA for a considerable period of time, and has made every effort to contain costs and restore a level of profitability to WBHOA. Of particular concern is the project delivery capability of the business which has been negatively affected by unplanned Covid-19 restrictions, the contractual environment and the increased difficulty in raising guarantee facilities necessary to secure new work. The protracted effect of Covid-19 has delayed any meaningful economic recovery and procurement activity in Australia.”

WHBO notes that during 2020 the company entered into negotiations with a third party to sell the Probuild business, but that fell over because approval from the Australian Foreign Investment Review Board was not obtained.

Following this, WHBO says it implemented a strategy to downsize the business, and considered other sales options which proved fruitless due to concerns potential acquirers had about the impact of the regulatory approach to COVID here in Australia.

“The Australian businesses have not been able to complete projects on time and not been able to recover variation and delay claims, resulting in material losses in the financial period to date and the requirement for further funding and balance sheet support from WBHOC,” WHBO said.

“Management have assessed the risk exposure to the group in continuing to support Australia against the risk to the group of discontinuing this financial support.

“After considerable discussion and thought by the Board…WBHO has determined that, with effect from 22 February 2022, the Company through WBHOC will no longer provide financial assistance to WBHOA.”

The company’s latest results show that the parent expected WBHOA’s operating loss was going to increase by at least 200 per cent.

The full list of companies now under voluntary administration is as follows:

Free mental health and wellbeing support for workers impacted by Probuild administration

The OzHelp Foundation has confirmed it will provide free mental health and well-being support, including counselling, for construction workers impacted by the voluntary administration of Probuild.

Funded by the Australian Government National Suicide Prevention Leadership and Support Program, OzHelp provides health screening, education and training, as well as wellbeing support for workers in high-risk industries, including building and construction.

CEO Darren Black said workers impacted by the collapse of Probuild need to know that help is only a phone call away.

"We have been advised that hundreds of employees and thousands of contractors have been impacted by Probuild entering administration." Black said.

“The uncertainty and financial stress caused by events like these can have a big impact on an individual’s mental health.

“If you are stressed, having trouble sleeping, drinking too much, or for any other reason need support, help is available from our trained and relatable wellbeing support workers and counsellors, whether you just need to chat or additional support."

You can access support by calling 1300 694 357, 9 am to 5 pm AEDT.

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