The Australian company which won the interim joint-venture contract in October to deliver the Auckland city rail link’s underground rail systems, RCR Tomlinson Ltd, went into administration on Wednesday.
This comes 6 weeks after the project’s overall joint venture partners, Auckland Council & the Government through City Rail Link Ltd, announced the C7 interim contract for the underground systems as an important milestone.
This interim contract was to be followed by RCR Tomlinson & its partner, WSP-Opus, working with CRL, Auckland Transport & KiwiRail to formulate the full project alliance agreement, which was expected to be awarded by May 2019.
WSP-Opus is the working name for Opus International Consultants Ltd, which Canadian property services consultancy WSP Global Inc bought last December.
The project includes the provision of track, track slab, overhead line, signalling, control systems, trackside auxiliaries, control room fitout & building works.
RCR Tomlinson pointed to its precarious state in August
Trading in RCR Tomlinson’s shares was halted on 12 November at the company’s request, and further suspended 2 days later pending an earnings upgrade & consequences for its funding.
On Monday, a group of shareholders filed a class action proceeding in the New South Wales Supreme Court.
One director, David Robinson, a career engineer at McConnell Dowell who finished his 37 years there in 2015 as managing director & chief executive and was appointed to the RTR Tomlinson board on 1 March, wasn’t aware of the company’s dire predicament – he spent $A9900 to add 11,000 shares on 31 October to the 30,000 he already held.
RCR Tomlinson completed an underwritten $A100 million capital-raising on 28 September.
However, interim chief executive Bruce James said in Wednesday night’s announcement the company had been unable to secure additional funding and had appointed McGrathNicol Restructuring as voluntary administrators. The first creditors’ meeting is expected to be on Monday 3 December.
The company’s annual report, issued in August, showed its order book was down from $A1.36 billion in 2017 to $A1 billion, it had $A2 billion of revenue from continuing operations but reported a statutory loss of $A16.1 million ($A25.7 million profit in 2017), an underlying ebit loss of $A4.2 million ($A41.2 million profit in 2017).
It attributed much of its $A735 million increase in sales to the progress of a number of largescale solar farms, but also attributed the ebit loss to cost overruns on 2 of those projects, Daydream & Hayman. That resulted in cumulative writedowns of $A57 million from the original tendered margin.
The company said in its annual report issued on 28 August: “A large proportion of the writedowns were only recently identified. This was due to the onsite procedures adopted by a limited number of site personnel, which had the effect of circumventing RCR’s standard processes & project level systems relating to procurement commitments.”
10 December 2017: WSP takeover of Opus down to the washup
Attribution: RCR Tomlinson, CRL release, ASX statements.