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Financially-stressed home builder Metricon has struck a new financing deal that will see a huge injection of fresh funding from its key lender the Commonwealth Bank and $30 million in cash from its shareholders to shore up its balance sheet.
The funding deal likely extinguishes any need for additional funding, though the group’s external advisers led by former PwC boss and current Carlton Football Club president Luke Sayers had pursued new lines of funding via a convertible note.
The fresh support came as NSW Premier Dominic Perrottet on Friday indicated his government would consider a bailout for the company if necessary.
Metricon’s head office in Mount Waverley. Credit:Joe Armao
The company also announced its long-term banking partner – the CBA – had on Friday approved an 100 per cent increase in Metricon’s existing working capital facility.
The sudden death of Metricon co-founder and chief executive Mario Biasin’s last week and a meeting with Victorian Treasurer Tim Pallas sparked rumours the group was in dire financial straits and was losing the support of Commonwealth Bank.
The group’s acting chief executive Peter Langfelder hit back telling a press conference last week that the business was in good shape and said it was paying all of its subcontractors on time.
On Friday he welcomed the support from the group’s shareholders and its banker CBA.
“This significant injection of capital by the owners demonstrates to our customers, employees, sub-contractors and suppliers our confidence in the viability, profitability and future of the Metricon business.
“We are so appreciative of the bank’s support – which demonstrates its confidence in our future,” he added.
According to sources familiar with Metricon’s business activities, Biasin engaged Sayers’ business Sayers Group weeks before his sudden death to consider ways to future-proof the business and to provide more headroom for the business.
As part of Sayers Group’s work, a small number of financing organisations, including special situation lenders, were briefed under non-disclosure agreements in recent weeks about a range of options to position Metricon for future growth and to ensure it has enough breathing room in case the economic outlook for the industry worsened. Those discussions were paused following Biasin’s death.
Premier Perrottet said Fair Trading NSW and the state’s building commission were working together to determine the extent of the challenge facing the home builder. “There is no doubt the construction industry has been doing it incredibly tough over these last few months, particularly with the weather that we’ve had across Sydney and regional New South Wales.
“So we’ve been engaging very closely with the construction sector, particularly those smaller construction companies who I think some of these challenges are more pressing [for]. And we’ll work through those issues, but I don’t want to preempt that because we’re trying to, at the moment, attain and have a greater appreciation of the extent of the challenge that Metricon and others are facing.”
A spokesman for the Victorian government said it understood the impact that supply issues and cost increases were having on builders and those builders’ residential clients and it would continue to work with the industry to address those challenges.
With Jackson Graham
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