Today we have a Category 6 Builder with a 240 million licence capacity called Privium Pty Ltd attempting to merge with another building company and novate contracts but a merger of a builder in this Covid era is unlikely.
Subbies brace yourselves, you really need to be on your A game right now in a market where prices are soaring and construction companies are about to topple. With Xmas coming up, it will only get worse as their cash flow will be stretched even further with little or no income during the shutdown period.
The second most used metal in the world is Aluminium, the price has increased 50% this year. There are many factors including China drastically reducing its production of Magnesium because of their lack of domestic electricity. They produce 87% of the worlds Magnesium which makes up between 3 and 13% of Aluminium but there are many other factors.
Aluminium is just one product which have risen dramatically in price this year. Timber is another and it's putting strain on already strained businesses.
Anything imported has the added cost of sea-freight which has almost doubled in the past 12 months.
Then we have trade and labour shortages in part due to the Government paying people as much or more than they could earn by going to work, not to mention Covid lockdowns and closed borders.
State Governments have made an almighty mess of this so called Pandemic.
There is no money in building and even less now with people buying work but unable to even Ponzi it due to rapidly increasing material prices. How would a company that has lost 28 million (Glen Norris Courier Mail) be of any value to another builder?
Privium are also novating approximately 150 contracts to Torsion Pty Ltd, a Category 2 builder with a 12 million turnover capacity (QBCC licence has not been updated).
The only way a small builder could manage so many new builds is with an injection of staff and subbies and some of the staff come from Privium.
I would assume an injection of capital would also be needed.
General Manager of Torsion Darryl Hopkins called late today and will be making a statement that I will post when its received but one thing he said was that before he had any knowledge of this potential deal with Privium, Torsion has increased its QBCC capacity to Category 3 with allowable turnover of 30 million.
He also said that Torsion are only accepting contracts for investment and first home owner houses and will pay any subbies outstanding invoices for those house contracts he accepts only. He said he will not be accepting any contracts for units.
Statement from Darryl Hopkins Thursday 7.30pm
A couple of things I would like to reiterate from our conversation.
- Torsion Pty Ltd is its own business. We are a family owned business who specialises in building investment homes and homes for first home buyers.
- Torsion Pty Ltd does not have any affiliation with Privium in ownership, directorship or shareholders
- Torsion Pty Ltd has Novated build contracts that were between various owners and Privium across South East QLD
- Torsion Pty Ltd has done this to help the clients who have homes under construction and the subbies who are relying on the future workload these buildings were to provide.
- Torsion Pty Ltd is in a strong financial position.
- Whilst there is not a lot of profit to be had in this process there is enough for us to be confident that Torsion Pty Ltd will not get hurt.
- The not so obvious benefit in this for Torsion Pty Ltd is the relationships to be made with great subbies and suppliers that Torsion can take forward and build a great business with in to the future.
Trade Debtor insurers are pulling cover for Privium Pty Ltd and when that happens, it can have serious ramifications as few subbies would work for a company where they cannot insure the debt.
Our attempts to contact Privium have gone unanswered but it looks like Glen Norris of the Courier Mail had more luck with this in depth article. Click here for the Courier Mail article.
"One of the state’s biggest construction companies is shutting down the bulk of its building operations with warnings it could collapse owing subbies more than $20m.
Underwood-based Privium Group had told customers that it would transfer uncompleted projects to a separate builder called Torsion after warning its finances were deteriorating.
It believed 150 homes will be transferred.
Privium reported a loss of more than $28m last year as the construction industry felt the impact of shutdowns, labour shortages and price hikes caused by Covid-19. However, in the same period it paid dividends in excess of $18m."
Our concern is how do they pay subbies for invoices which to date, remain unpaid and are overdue.
Perhaps one way might be to pay back the 18 million in dividends and use that money to pay subbies.
This is an unfolding story, not just in Qld. There will be more in coming days.
If you are impacted by the current situation that Privium Pty Ltd is in or are an unpaid subbie or supplier, please feel free to contact us at email@example.com, we may be able to help in some way.
Subbies join here and access our private members forum, we offer two membership options, 6 or 12 months. We make exceptions for some suppliers that we trust and who call us first but in general, if you are not a subcontractor, don't bother joining. We have our ways of weeding you out before you can access the forum and we will not refund your membership fee.