How ex-senator Bob Day’s Home Australia building empire collapsed
IN 2003, Bob Day’s Home Australia company was worth almost $400 million and employing about 1000 people. Today, the former Senator will lose his home. So what went wrong?
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BUSINESS was booming 13 years ago when Bob Day fulfilled his 30-year dream of forging a national building empire from Adelaide.
Sealing his Australian network of home builders by buying Sydney’s Huxley Homes in August, 2003, Mr Day’s Home Australia company was worth almost $400 million and employing about 1000 people.
Tellingly, he did not disclose the purchase price. On Monday, he declared the high price paid for Huxley as one of his two biggest mistakes — the other was not putting in place a proper management structure for his business when entering the Senate in 2013.
Back in 2003, though, Mr Day was brimming with hope about Huxley, declaring the acquisition would boost sales by $70 million to $300 million annually.
It was a goal Mr Day exceeded by the time he first stood for federal parliament in 2008 — in Mayo, hoping to replace Alexander Downer — when Home Australia was achieving more than $300 million annually in home sales.
The lofty goals of 2003 were being achieved — to complete a national home construction business with individual firms in all five mainland state capitals, with Home Australia as the parent company.
But the vision soured and Huxley Homes became a financial millstone. By 2012/13, Home Australia lost $3.27 million, followed by $3.35 million the next financial year.
“While four members of the group all posted a profit in 2015/16, problems and losses associated with Huxley Homes (and the high price paid for the company in 2003), has seriously undermined the (Home Australia) Group’s balance sheet and ability to continue trading,” Mr Day said in a written statement.
Mr Day returned to Home Australia in 2015, despite entering the Senate in 2013, to help sell the company or find an equity partner to recapitalise the firm.
This culminated in signing a contract to sell a 75 per cent stake to Philippines-based Goshen Capital Resources, which Mr Day said would have provided enough liquidity to allow Home Australia to trade out of it problems.
But documentation of a $US20 million transfer proved fake, wrecking Mr Day’s creditor payment plans and casting the business into insolvency.
Liberal Democratic Senator David Leyonhjelm, a close political associate of Mr Day, said the Home Australia chief had admitted last week he should have tried to sell the business in parts, rather than a whole.
Senator Leyonhjelm also said Mr Day told him some managers he put in to run his business had not performed as expected.
“I think he was expecting them to do the job he had before he was elected,” Senator Leyonhjelm told The Advertiser.
Adelaide real estate identity Anthony Toop said: “I’ve known Bob all of his 40 years in business. I am sad to hear Bob will not only lose his business but also his lifelong passion to help the community through his political career.
“Knowing Bob, he is unlikely to rest until he makes good to the people he has impacted. He has always been very generous to his local community.”