A collapsed building company that was owed $350 million has partially been saved after another firm bought parts of it.
Earlier this month, major Western Australian building and engineering company Clough Group went into voluntary administration after a takeover deal fell through.
The Perth company collapse left about $10 billion worth of government projects in doubt, which Clough was contracted to complete, including the federal government’s Snowy Hydro 2.0 expansion and other projects in NSW, Western Australia and Papua New Guinea.
The firm, which had been struggling financially, was slated to be absorbed by Italian building conglomerate WeBuild for $350 million.
The merger fell through in early December, triggering Clough’s demise.
However, WeBuild came out as the ultimate winner, as it was still able to snap up parts of the company in a deal struck with the administrators, reportedly for millions of dollars less than the proposed merger.
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Clough’s South African owners, Murray & Roberts, appointed Sal Algeri, Jason Tracy, David Orr and Glen Kanevsky of Deloitte as voluntary administrators.
It’s since emerged that Clough’s parent company owes $350 million to Clough though administrators are unsure if they can recover that money.
Last week, the administrators came to an agreement with WeBuild, which reportedly forked out $17.6 million for the “acquisition of a set of assets”.
Those assets included parts of Clough’s business such as its share of the Snowy 2.0 and Inland Rail contracts.
The administrators confirmed to news.com.au that Webuild had until Tuesday to define and agree to a final contract.
However, this deadline has since been extended to January 25.
One of the joint administrators, Mr Tracy, said: “A great deal has been achieved in just over a week, and it’s appropriate that we give Webuild more time to do the work needed to assess opportunities and then execute an agreement.”
Clough’s sudden collapse has also left in doubt the future of Clough’s 1250 Australia-based employees, and the 1250 overseas employees from Papua New Guinea, the UK and the US.
Clough appears to have been in financial strife for some time with its auditors, PwC, warning in the most recent filing with the Australian Securities and Investments Commission (ASIC) that the firm’s continued survival was dependent on the merger.
In the lead up to the acquisition, Clough borrowed $167 million from WeBuild, according to The Australian.
Clough posted a $375.3 million loss and a $304 million working capital deficit in the last financial year.
WeBuild was also meant to hand out a further $30 million as a loan to keep the company afloat but put an end to this when the merger was scuppered.
As a result, Clough promptly put itself into administration.