CBA, ANZ and NAB exposed to Probuild collapse as the race to find new owner starts

Revealed: Australia’s largest banks have been caught up in the Probuild collapse as administrators work on plans to resurrect the company.

Three of Australia’s largest banks as well as global insurance giants have been caught up in the collapse of Probuild as the sale process of the former construction giant starts.

According to documents sent to creditors, ANZ and the Commonwealth Bank were significant actual or contingent creditors of parts of the Probuild empire. They also identified the NAB as a creditor of certain group entities.

The big insurers who back projects using construction bonds are also in the risk line.

Global trade credit insurance companies including Euler Hermes, AIG and Tokio were named as significant actual or contingent creditors of certain group entities.

Tokio also has a “significant” secondary exposure as an actual or contingent creditor as part of a syndicated facility.

But the documents said that in the syndicated facility, the CBA was the primary creditor that has the capacity to make a claim in the administration on behalf of syndicate members.

The banks declined to comment and the documents further identified insurer Liberty and Swiss Re as also holding a significant secondary exposure as part of a syndicated facility,

But the administrators are hoping to avoid triggering the construction bonds on the group’s stalled projects by holding the company together and making a rapid sale.

Workers at the Cbus 443 Queen St in Brisbane on Wednesday.

On Wednesday the tier-1 construction company went into voluntary administration after its South African parent company Wilson Bayly Holmes-Ovcon (WBHO) refused to bankroll the Australian arm of the business.

Administrators Deloitte Turnaround & Restructuring partners Sal Algeri, Jason Tracy, Matt Donnelly and David Orr were appointed after being,referred to by law firm King & Wood Mallesons.

Deloitte Australia has been advising Probuild over the last two years, billing more than $500,000 which was not part of the voluntary administration, and it says this does not present a conflict.

Mr Algeri refused to comment on why WBHO decided to pull the pin on WBHO Australia after saying they would provide 12 months of financial support four months ago.

However, he said they were focused on keeping the business going, retaining workers and return to “some normality” and it was too early to place a monetary figure of the collapse.

“I haven’t done maths right know but our aim is to minimise that by keeping projects alive,” he said.

Deloitte Australia is running advertisements nationwide on Saturday in an expressions of interest campaign to sell Probuild and the company’s controlling interest in construction company Monaco Hickey, and WBHO Infrastructure in WA.

Mr Algeri said the faster building sites can return to normal and a buyer is found the expressions of interest campaign the quicker they can work through the financial issues.

“We need to get the blood pumping through and running parallel to that is the sales process,” he said.

“We’ve already has significant interest and we’re working through that but time is of the essence. We’ll hopefully get a quick solution.”

Workers leave the Probuild worksite on 443 Queen St in Brisbane.

Mr Algeri said at this stage “the lion’s share” of workers have been paid up to the current month.

“We’re still working through that and that’s why we are focused on getting the projects up and running. If we can do that hopefully some of those will be cleared because the owners of those developments will want to settle,” he said.

Mr Algeri said if there are long delays and a new owner cannot be found then contingent liability clauses could potentially be triggered sparking damages claims, the call up of bank guarantees and other issues.

“That’s what we’re really trying to prevent,” he said.

Despite Probuild’s history of underbidding and cost over runs Mr Algeri said he could not comment on whether a new owner would continue the practice.

Deloitte Turnaround & Restructuring has track record in reviving large companies that have collapsed.

They were appointed to Virgin Australia when it collapsed at the start of the Covid-19 pandemic and the business was later sold to Bain Capital.

Mr Algeri said they have spoken to employees, clients, key contractors, any other key stakeholders including unions to give them “clear clarity” on what they want to achieve.

A statement from the Victorian building industry group of unions said they had met with administrators and were supportive of the process.

The unions said the collapse was a “result of foreign business owners playing with the lives of Australian working people. We hope that an Australian company will take it over.”

Originally established in Western Australia in 1987, WBHO Australia is headquartered in Melbourne, with offices also in Sydney, Brisbane and Perth. The group directly employs about 750 people.

Originally published as CBA, ANZ and NAB exposed to Probuild collapse as the race to find new owner starts