Building giant Probuild plans to call in administrators

Administrators will be appointed to Probuild, one of the country’s largest builders, after its South African parent pulled the pin on further financial support to the troubled group.

Administrators are set to be appointed to Probuild, one of the country’s largest builders, after its South African parent pulled the pin on further financial support to the troubled Australian arm.

Johannesburg-based Wilson Bayly Holmes-Ovcon said Wednesday it was withdrawing further funding to its Australian operations and would commence proceedings to place the business into administration.

Hundreds of workers were seen pulling equipment and tools from Probuild constructions sites across the nation ahead of the decision to bring in administrators.

A worker at Cbus Property’s 443 Queen St project in Brisbane, who declined to be named, said he was told the site would be locked at the end of the day.

He said the high-end apartment tower had been plagued by lengthy delays over the past two years.

“We were just told to pick our tools up because Probuild were pulling the pin on all their projects across Australia,” he said.

Another subcontractor said his firm was owed at least $250,000, with others owed substantially more.

“It is going to run into the millions what tradies are owed,” he said.

Deloitte Australia is understood to be assisting Probuild and they are likely to be appointed as an administrator for a number of Probuild entities on Thursday.

Deloitte Australia declined to comment.

The company has major works around the country including the PDG developed 18-storey second stage of Elizabeth North in Melbourne, which will be the future headquarters of global biotech company CSL.

It was also building the Poly Australia developed office tower 1000 Latrobe in Melbourne’s Docklands.

Workers at the Probuild worksite on 443 Queens St, Brisbane on Wednesday. Picture: Zak Simmonds

Melbourne-based Probuild, owned by South African company Wilson Bayly Holmes-Ovcon (WBHO), was set to be sold to the China State Construction Engineering Corporation last year.

However, the Foreign Investment Review Board scuppered the deal after raising national security concerns.

Instead, WBHO said it would end construction in Queensland and Western Australia this year.

Workers and subcontractors were pulled off the company’s sites in Brisbane, Melbourne and Sydney yesterday amid speculation Probuild’s South African-controlled parent was pulling financial support.

In a statement to the Johannesburg Stock Exchange on Wednesday, WBHO said it had started proceedings for an application for the administration of its civil arm WBHO Australia.

It said the “level of risk versus reward’ in the Australian construction market and the depletion of resources meant the company will no longer provide financial assistance to WBHOA.

Penthouse at 443 Queen St

The company said after the failure to sell Probuild last year they had implemented a “contingency plan incorporating a revised strategy for Probuild aimed at consolidating and stabilising the business.”

“The Australian construction environment has also become increasingly competitive … and the potential risk on large mega-building projects outweighs the current margins available.” the company said.

“With this in mind, the company has adopted a more conservative bidding strategy focused on securing lower-risk and less complicated projects.

“Based on this approach, it was the company’s intention to see some decline in the order book as we reduced our exposure to high-risk projects.”

Comment has been sought from Probuild.

A spokesman for the Queensland Building and Construction Commission said the watchdog has been in contact with the company directors and will continue to monitor the situation.

The spokesman said that if builders, subcontractors or suppliers have concerns about non-payment, they’re urged to contact the QBCC.

In a filing to ASIC last year, Probuild said the pandemic had increased project costs and eaten into profit. “It also has resulted in the delay in contract profit recognition due to the prolongation of projects into subsequent reporting periods,” Probuild said.

Probuild recorded revenue of $1.3bn last year and a profit of just over $4m but took a $45m hit on the 47-level Queen St project amid design difficulties and a two-year delay.

It’s Queensland arm, PCA Qld, has accumulated losses of more than $28m over the past two years impacted by the riverfront 443 Queen St project that is billed as Australia’s first subtropical designed building.

PCA Qld’s losses forced its parent Probuild Constructions (Aust) to pump $15m into the company last year as part of a recapitalisation. Industry sources say the loss on the Queen St project could be as much as $120m.

Workers leave the Probuild worksite on 443 Queens Street on Wednesday. Picture: Zak Simmonds

At the time WBHO said it remained “optimistic about the fundamentals of Probuild and its prospects in the Australian market and continues to assess all potential opportunities for Probuild to maximise shareholder value and the value and potential of Probuild”.

Probuild employs more than 520 people across Victoria, New South Wales, Western Australia, and Queensland, and is administered by its head office in Melbourne.

Probuild is one of Australia’s largest construction companies, with work in hand at around $5bn.

According to its website, the company has thousands of apartments under construction and more than 370,000 square metres of retail work under way with the bulk of projects in Melbourne.

Other projects in Melbourne include the next stage of US equity giant Blackstone’s huge build-to-rent apartment development at Caulfield Village and the 496-apartment building Midtown MacPark Stage C1.

In Perth it is building the The Towers at Elizabeth Quay in Perth, Stage 2 and 3 and the 450-room W Hotel on Darling Harbour in Sydney.

Originally published as Building giant Probuild plans to call in administrators