Despite raising $100 million from shareholders just three months ago, RCR Tomlinson, one of Australia’s leading EPC contractors with its headquarters in Sydney, was placed in administration on Thursday, after running into troubles with its solar business.
In a statement to the ASX, RCR said it appointed administrators McGrathNichol, after it had entered a second trading halt in a matter of months a week ago.
“Further to the company’s trading halt and announcement on November 12, 2018, the company has not been able to secure additional funding,” RCR said, adding that as a result the boards of the group companies met and resolved to appoint administrators.
Administrators McGrathNicol will put RCR up for sale immediately, noting that they were assessing the business and urgently seeking funding from RCR’s financiers.
“The administrators will work closely with RCR’s employees, suppliers and customers to quickly stabilise operations and to determine the appropriate strategy for the business,” a McGrathNicol statement said.
As pv magazine Australia reported last week, The Victorian branch of the Electrical Trades Union called on RCR Tomlinson to “immediately pay arrears” owed to contractors in Victorian projects, raising doubts as to RCR’s solvency and ability to pay.
While RCR was claiming that solar projects are progressing as planned, workforce reductions on the site brought these claims into question. According to the Victorian branch of the ETU 130 workers were unexpectedly fired from the Wemen solar far near Mildura in mid-October.
RCR hit difficulties in its solar business earlier this year when it suffered a significant net loss largely driven by write-downs, which pushed the company to launch capital raising and scrap dividends.
In its FY18 results, the company reported a $57 million write-down on 150 MW Daydream and the 50 MW Hayman Solar Farms located in Northern Queensland, noting that it had experienced significant cost overruns due to several compounding project-specific issues.
Following this statement, institutional investors acquired RCR stock at a discounted price of $1 a share. Given that they were assured the company had a strong balance sheet, investors are now furious and taken aback by RCR’s collapse.
“It is impossible to envisage a situation where this outcome is not the result of gross negligence, incompetence or fraud on the part of the board, management and/or its bankers,” Simon Mawhinney, managing director of Allan Gray, RCR’s third -biggest shareholder, told The Australian Financial Review.
“This after having raised $100 million from shareholders only three months ago and representations that the business was in good shape but for one solar contract.”
RCR Tomlinson has more than 3,400 employees across the nation and specialises in big infrastructure projects in the mining and energy sectors.