What was only a rumour yesterday has been confirmed this morning, with major construction company Probuild going into voluntary administration following the discontinuance of financial assistance from its parent company Wilson Bayly Holmes-Ovcon (WBHO).
This leaves a score of disgruntled tradies and other contractors unpaid, not to mention all those folk waiting for their buildings to be completed! Many were seen packing up their tools for good on Wednesday afternoon after being told the news. The Company also employs 500 direct staff who are now sadly unsure of their future employment.
The writing was perhaps on the wall after the company was almost sold off by WBHO to state-owned China State Construction Engineering Corporation, with the deal falling through due to the expectation of federal intervention, a regulatory decision slammed by Probuild’s hierarchy.
WBHO largely pointed the finger at widespread complications from COVID-19 lockdowns, in particular the decreased demand thanks to travel restrictions, work from home trends, and lack of international students.
However, the Company also notes “The Australian businesses have not being able to complete projects on time and not been able to recover variation and delay claims, resulting in material losses in the financial period to date and the requirement for further funding and balance sheet support from WBHOC.”
This is likely in reference to the Company’s Queensland division and the 443 Queen St Brisbane project, which is being reported to have already amassed a $48 million loss due to significant setbacks and complications.
Probuild is one of the largest building contractors in Australia, involved in the construction of buildings such as the Melbourne Convention Centre, Chadstone Shopping Centre, the current Victorian Police Headquarters, and is currently developing the new headquarters of Australian Biotech giant CSL (ASX: CSL).
Although Probuild is nowhere near the scale of China’s Evergrande collapse, it continues a worrying trend for the large scale building construction industry. With the Covid related issues raised in WBHO’s statement not just isolated to Australia.
Investors in the unlisted company will now wait until March 1 to read their Half Year results to see the details of the financial effects of the decision.
Conor Murphy is the Marketing Coordinator at TradersCircle
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