McAleese in voluntary administration following board rift

McAleese is in voluntary administration after a firm linked to a director refused rent cuts required for a rescue plan.

Mark Rowsthorn. Shareholders were said to be angry with him over the state of the company.

Transport group McAleese has gone into voluntary administration after a company associated with one of its directors, Gilberto Maggiolo, refused to grant rental reductions required as part of rescue plan for the company.

Mr Maggiolo, a Queensland construction identity, is a director of McAleese and of TTPH Pty Ltd, which was asked to help secure a reduction in the real property rental costs for McAleese as part of a deal backed by distressed debt investor SC Lowy.

Mr Maggiolo and his longtime business partner Tony Bosso had opposed the recapitalisation plan and were attempting to build support for an alternative, as yet undisclosed, proposal for McAleese (MCS) through their company Havenfresh.

They had also proposed a resolution to remove five of McAleese’s six directors, including former rich lister Mark Rowsthorn. Mr Maggiolo would have been the sole director left had the vote proceeded.

But at a board meeting yesterday McAleese failed to secure the rent reduction and the subsequent refusal of SC Lowy to grant a waiver of the condition triggered the immediate repayment of all debt and interest.

Mr Maggiolo could not be reached for comment this morning.

Gilberto Maggiolo

According to company documents McAleese paid $5 million in 2015 to TTPH for nine leases associated with its heavy haulage and lifting division. Six of the leases have terms of 10 years expiring in 2021, with two five-year renewal options and annual increases of the greater of 4 per cent or the consumer price index.

The board stand-off came ahead of a shareholder vote on a proposed restructuring that would have delivered SC Lowy 35 per cent of the group and see Mr Rowsthorn lift his holding from 30.78 per cent to as much as 65 per cent.

But shareholders were said to be angry with Mr Rowsthorn over the state of the company and his support for a deal that leaves them in a position where the amount they can recoup from the wreckage is limited.

Announcing the appointment of voluntary administrators, McAleese said in a statement that “shareholders are highly unlikely to receive any value for their existing shares’’.

Global fund manager BlackRock is believed to have been the main investor behind the SC Lowy recapitalisation plan, which aimed to cut McAleese’s $196 million in borrowings.

It is now understood BlackRock was the buyer of the debt from SC Lowy, in a deal that would have cut borrowings to $115 million.

Lenders to McAleese included ANZ, Westpac and HSBC, but JPMorgan is no longer in the consortium.

McAleese directors have appointed Joseph Hayes of McGrath Nicol as voluntary administrator. The firm has previously undertaken work calculating the proceeds from a liquidation of McAleese, sources said.

The collapse of McAleese comes amid a downturn in the mining services sector, where contractors have machinery sitting dormant due to the limited demand for work.

But the company also had a troubled birth, listing on the sharemarket only weeks after one of the trucks in its Cootes fuel transport business was involved in a fatal accident.

The crash triggered contract losses and major financial challenges for the company, and they were later compounded with the mining downturn, which saw one of its key clients, Atlas Iron, almost fail.

The collapse of McAleese was not widely unexpected.

It is understood that Atlas Iron had been preparing for the collapse of the business for some time.

Some say that the situation may now carry some benefits for Atlas.

This was where it was now able to cancel existing contracts with McAleese, which enabled the company to secure a slice of the Atlas profits amid buoyant conditions.

However, one source said the situation for McAleese was “disastrous”, as other customers could also walk away from their contracts.

Existing contractors to Atlas include Maca, BCG and Qube, which may secure the addition work previously carried out by McAleese.