Hutchinson Builders owed $5.5m for work on Ruby tower by collapsed Ralan Group

The Gold Coast builder of the first tower in the $1.4 billion Ruby project “had no inkling” developer Ralan Group was on the brink of collapse. Now it’s millions of dollars out of pocket

Greg Quinn, Managing Director at Hutchinson Builders.

THE Gold Coast builder of the first tower in the $1.4 billion Ruby project “had no inkling” the developer was on the brink of collapse and was negotiating contracts to build the second and third towers on the Surfers Paradise site.

Hutchinson Builders is owed its full $5.5 million final payment for its work for Ralan Group, which went into administration on July 31 owing half a billion dollars and throwing $1 billion development pipeline and hundreds of Paradise Resort jobs into doubt.

Buyers in the future towers have also been stung, with most of their deposits spent by the group as it failed.

Hundreds of buyers, many who also worked as sales agents for Ralan, staged a spirited protest outside NSW parliament last week, waving placards saying “Ralan cheating” and “Law enforce now”.

Creditors are meeting in Sydney this morning to hear from administrators Said Jahani, Graham Killer and Philip Campbell-Wilson of Grant Thornton who are investigating the collapse.

Dozens of Protestors at NSW Parliament angry about money they have lost in Ralan apartment developments. Picture: David Swift.

CONTRACTS CRASHING AS VALUATIONS FALL SHORT

Hutchinson managing director Greg Quinn said the builder, which has local offices in Southport and Coolangatta, had paid all its subcontractors and suppliers on the job and would cop the full $5.5 million shortfall.

“It’s quite a big swipe to our profit for the 2018-19 year,” he said

“After we put so much hard work into the project for 19 months, to not get final payment is really disappointing.

“But Hutchies has a wonderfully strong balance sheet, at circa $340 million, and is debt-free so we are still in a good position.”

Administrators and creditors will consider selling Paradise Resort to recoup some of the debt, but whether a new owner would continue the planned demolition and development or leave the resort operational is uncertain.

Ruby tower one on the Gold Coast.

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Mr Quinn said the collapse caught them unawares and that no-one in the industry had seen it coming.

“We had no inkling of this occurring, in fact we were negotiating for stages two and three,” he said.

“I was really quite surprised.

“But we’ve moved on, it’s occurred, it’s unfortunate but we can’t dwell on something we can’t control — it would be a different kettle of fish if we weren’t in such a good position.”

Huchinson has plenty on its books to keep it busy — it has six projects under way at Palm Beach, others at Main Beach and Southport and is working on the current stage of The Star’s $3 billion expansion.

“It’s a very strong market,” Mr Quinn said.

Among the secured creditors of the group is Melbourne financier Wingate, which loaned $36 million to the first stage of Ralan Group’s Ruby development, and are understood to have also tipped in for future stages.

The lender holds a second priority mortgage over the Paradise Resort property, which Ralan picked up for $75 million in 2015, with a first priority mortgage held by a subsidiary of unlisted public company Balmain NB.

Wingate said in a statement it was confident its investors’ funds were safe.

“Wingate is limited to what it can disclose while investigations into Ralan are being conducted,” the statement said.

“We have great empathy for all those impacted at this time and do not want to prejudice the process in any way.

“Wingate presently has a number of open debt positions with Ralan, all of which are secured by charges and mortgages over real property. We expect that Wingate will recover all amounts outstanding.

“Wingate is proud of its track record of capital preservation. In line with our commitment to risk management and diligence, we have measures in place to ensure that we and our co-investors are protected in events such as this.”

Other secured creditors named by administrators include the Australian Tax Office, Westpac subsidiary St George and National Australia Bank.