24-02-2022 11.09 am
It has been confirmed that this morning, Probuild and Australian based associated entities such as WBHO Infrastructure Australia are in administration with Deloitte Melbourne in the chair.
There is talk of a restructure but the chances of that are almost zero and for good reason.
We doubt the numbers stack up. There is no minimum cost to be expended for a pot of gold at the end which means this ship is sinking and fast.
There is no way anyone onshore would buy it.
If their 5 billion pipeline of work has no attraction to the South African parent group, it would be valueless to existing players who have probably been undercut in the building of that vast pipeline and have first hand knowledge that the projects amassed by Probuild are profitless.
Based on the current disaster, it would be hard to believe otherwise.
In our opinion, the only reason the Chinese were interested in buying Probuild was to pick the bones, junk the rest and be immune because they're offshore.
Read into this the events with CRCG Rimfire 5 years ago.
Even though a 1 billion surety was signed by CRCG and held by the QBCC, it was a worthless scrap of paper because the money was offshore and unreachable.
The best thing subbies and suppliers can hope for is that they get to negotiate new contracts with the construction companies who pick up the pieces of the Probuild projects and rest assured, the new builders won't do that without being paid large premiums on what Probuild estimated.
All those subbies and suppliers will have lost their substantial retentions and at least a couple of months of claims and that is going to bite hard.
I know of subbies owed in excess of $50,000 in retentions on top of their unpaid January and February claims which amount to hundreds of thousands of dollars.
One subbie told me they have been on the Queen Street Brisbane job for 2 years and have never been paid more than 75% of their monthly claims. They also said the job has been a "total shambles" from the beginning.
This does not appear to be a union issue, this job shows all the hallmarks of an underquoted and poorly run project.
Probable causes of this collapse are;
2. Potentially excessive dividends to the parent company
3. Incompetent management of the projects
4. Covid supply chain issues and price increases
All of the above.
A question to be asked is how the pricing was done and how competent the management of the projects were.
Another question we would like answered is how much Australian revenue was being sent to South Africa.
The time has come for foreign building companies to be very heavily regulated in Australia and investigate what damage they are doing to local construction companies by underquoting and liquidating because this is not the first time.
Various rescue packages will be mooted but at the end of the day, it will be liquidation like most of them are.
Subbies add a level of protection to your business and join SubbiesUnited and make use of our private members forum for up to date information but do not join if you are NOT a subcontractor, you are not welcome.