Administrator Deloitte has begun the search for a new owner for Probuild as it looks to restart, where possible, the collapsed building giant’s projects, which include emerging city landmarks such as The Ribbon in Sydney and the new CSL corporate headquarters in central Melbourne.
Activity on Probuild’s 18 projects around the country – worth billions of dollars in completed value – stopped this week when the builder’s South African majority owner Wilson Bayly Holmes-Ovcon (WBHO) pulled the pin on further financial support after deciding the risks involved outweighed any reward.
Work has ground to halt on Probuild’s projects.
“We will assess options to preserve value, and engage closely with creditor groups and other stakeholders across the spectrum, including clients, employees, unions, suppliers, contractors and sub-contractors,” Deloitte turnaround and restructuring leader Sal Algeri said.
“We will also be commencing a sale and recapitalisation process in order to secure a new owner for the businesses.”
The Deloitte team was appointed at 10pm on Wednesday, after WBHO released a statement to the Johannesburg stock exchange outlining its reasons for turning off the funding. It had spent more than $130 million to keep Probuild going over the past four years.
“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,” WBHO said.
“The protracted effect of COVID-19 has delayed any meaningful economic recovery and procurement activity in Australia.”
Deloitte’s restructuring team has been appointed to oversee 18 Probuild entities. The majority of its projects are in Victoria, with others in NSW, Queensland and Western Australia.
They include the next generation of city landmarks such as the new headquarters of CSL in Melbourne, an apartment skyscraper in Sydney called the Greenland Centre, and the 443 Queen Street residential tower in Brisbane being developed by Cbus Property.
In Melbourne, the $1 billion Elizabeth North project, which includes CSL’s new home, is already well-advanced. Its developer is PDG Corporation, a prominent player in the Melbourne market led by Vince Giuliano, who is hopeful work can resume within the next fortnight.
“We’re very keen to get back to business as usual as soon as possible. We’ll be working with the administrator and CSL to make sure we have a robust pathway, moving forward very soon,” he told The Australian Financial Review.
Probuild employs about 750 people and has annual revenues of more than $1.4 billion, according to Deloitte. Company records show it suffered a drop in revenue last year to $1.6 billion, from $2.4 billion a year earlier.
“We are caught up in a set of circumstances not of our making. We have several options for raising the necessary capital to continue as a premium Australian building company. These will all be pursued,” a Probuild spokeswoman said.
While the Deloitte administrators assess the extent of Probuild’s unpaid debts, the company had chalked up current liabilities worth $401 million last year. The builder had been racking up substantial losses on several projects including the Western Roads upgrade in Melbourne and the 47-level residential tower on Queen Street in Brisbane.
In a separate trading update, WBHO warned of further losses from its Australian arm as revenue fell by an expected 32 per cent, with the operating loss to increase by at least 200 per cent, in turn forcing the company to record impairments to goodwill and deferred tax assets “which has had a further negative effect on earnings”, it said.
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