Receivers sell Revolution Roofing to Victorian company Design Group

Receivers have sold Revolution Roofing to a Victorian company in a deal that secures jobs – but leaves most creditors with little hope of a dividend.

Revolution Roofing has been sold by receivers in a deal that secures the jobs of 170 workers.

Design Group, an amalgamation of sheet metal companies across Victoria, has agreed to take over the business with the promise of rebuilding it to a “market-leading” position in South Australia and Western Australia.

About 170 Revolution Roofing employees, mostly in SA, will be retained by Design Group, but close to 20 staff at sister company Nexteel will lose their jobs.

Design Group will acquire the Nexteel brand but the business’s operations have been shut down.

Receiver David Hodgson from Grant Thornton said the sale was conditional on the agreement of landlords to transfer leases to Design Group, and expected the process to be completed within a few weeks.

“This secures the future of Revroof for both Adelaide and Perth, providing employees, customers and suppliers with much-needed certainty and allowing them to continue their long-standing relationship with an iconic brand in the market,” he said.

Revolution Roofing managing director John Easling has lost control of the company he established in 2009. Picture: MATT LOXTON

“Design Group will be taking over the existing workforce to ensure stability and will be looking to invest in rebuilding the Revroof business to a market leading position in both the South Australian and Western Australian markets.

“We are extremely pleased with the sale to Design Group as we have found a buyer with a strong financial position who understands the industry. This will really set up Revroof for future success.”

The $88m collapse of Revolution Roofing and Nexteel was SA’s largest corporate insolvency since the demise of York Civil in 2018.

Administrators were appointed to the Regency Park-based businesses on December 6 amid soaring steel prices and ongoing supply chain issues.

Receivers were later appointed to take control of the company’s affairs by ASX-listed finance company and secured creditor Earlypay in a bid to recover close to $29m owed to it.

On Friday Earlypay told investors it had set aside a $9.6m provision to reflect its expected financial exposure in light of the sale deal.

“Accounts receivable remain under the ownership of Earlypay and the company continues to collect those receivables to reduce its exposure,” it said in a statement to the ASX.

Earlypay said the collapse of Revolution Roofing had triggered an overhaul of the company’s risk policies, including placing a $10m cap on individual client exposures and reducing its trade finance activities.

Meanwhile hundreds of other creditors of Revolution Roofing and Nexteel are unlikely to recover the debts they’re owed by the two companies.

Major unsecured creditors likely to be left out of pocket include the ATO ($8.7m), Japanese industrial conglomerate Mitsui & Co. ($4m) and US-based steel products manufacturer ITC Manufacturing ($3.1m).

While Design Group has agreed to take over the liability for employee leave entitlements, staff will be left chasing about $1.9m in unpaid super.

The sale effectively brings to an end Revolution Roofing director John Easling’s attempts to claw back control of the company he established in 2009.

Administrators PKF have been contacted for comment.