Condev Construction collapse: Founders’ emotional statement

The couple who founded Queensland construction giant Condev have released an emotional statement after being forced to call in liquidators.

Queensland construction giant Condev will call in liquidators after failing to get the support of developers for a $25 million rescue plan.

In a statement released on Tuesday night, Condev said the company was in the process of appointing a liquidator, details of which would be advised shortly.

Condev founders Steve and Tracy Marais said they were “absolutely devastated for the Condev family of employees, our tradespeople and our affiliates”.

The Marais’ lawyer Derek Cronin, of Cronin Miller Lawyers, said plans were being finalised to appoint a liquidator.

“Our clients have considered that the only option open to Condev is to appoint a liquidator to manage Condev’s affairs,” said Mr Cronin.

“Although we are instructed that the company is currently solvent, the decision was made based on forward projections dictated by increasingly challenging market conditions including the exponential rise in material costs.

“This has been extremely stressful for Steve and Tracy who are highly regarded in the industry and the Gold Coast community as tier one corporate citizens.

“Their charity arm Condev Cares has raised hundreds of thousands of dollars over the last decade for those in need in addition to being an employer of choice, and it is just simply a sad time.”

Mr and Mrs Marais sent an email to staff on Tuesday night confirming that the company had lost its lifeline.

“It is with the heaviest heart that we advise that we have not been able to achieve the outcome from (Monday’s) meeting with developers that we’d hoped and the decision to proceed to the liquidation of Condev Construction is now a matter of course,” the email reads. “ Liquidators will be appointed tomorrow (Wednesday).

Ms Marais told staff there was no requirement for them to come to work.

“We never dreamed this would be possible but we also never dreamed the world would be affected by a coronavirus and price hikes that would put us out of business,” she said.

Developers from around the country met on the Gold Coast on Monday with Condev where they were told the company needed more cash to finish off projects.

The developers, who have contracted Condev to build 18 projects across Queensland worth up to $1bn, were told construction costs had skyrocketed 25 per cent in the past 18 months amid the impact of the Covid-19 pandemic and more recent flooding.

A Queensland property identity, who did not want to be named, said Condev would have needed about $25m to stay afloat.

One subcontractor believed to be owed a seven-figure sum by Condev had earlier on Tuesday predicted the company would ‘definitely go into liquidation’.

“That’s 100 per cent certain,” he said.

“They’ve never done anything wrong by us and have been pretty good with payments.

“Obviously they owe us money and it’s not ideal but they didn’t do this on purpose. They’ve just gone in too keen (underpriced) on some jobs and it hasn’t worked out.

“They’ve been pretty transparent through the whole thing.

“We just need a quick resolution so that other builders can take over the jobs. The sooner life gets back to normal, the better.”

Workers at a Condev site. Picture: Glenn Hampson

The subbie said Condev’s collapse would not have a domino impact on his business.

“It’s a speed bump but we’re solid enough (to withstand it) … we’ll be right,” he said.

“But it could be the tip of the iceberg as far as the way the industry is going (with price undercutting and soaring material costs).”

One veteran Gold Coast subbie, who has worked with Condev for more than a decade, said he had ‘the utmost respect for them.”

“They’ve always been very good to all the subcontractors and always paid exactly on time,” he said.

“There’s never been an inkling of them not doing the right thing. I can only speak highly of them.”

The subcontractor said he believed Condev owners Steve and Tracy Marais had sold up all their properties ‘to try and help everyone out’ and some subbies had received payments this week.

He said he was owed retention money by Condev and expected to lose it ‘but I accept that’.

“Many years ago I took another builder to court and got absolutely nothing out of it,” he said.

“When a builder’s going good, they’re everyone’s best friend but if they miss one payment, they’re a. holes,” he said.

“Nobody goes broke because they want to unless they’re shonks.”

Condev along with other builders around the country has been hit by a litany of challenges including supply chain blockages, labour shortages and soaring prices for steel and concrete.

Stockwell managing director Mark Stockwell said the entire industry had been hit by a “perfect storm” with double digit increases in costs across the board.

Condev was building Stockwell’s Stanford and Oxford project at Dutton Park, an 82 apartment complex which is due to be completed in October this year. “It is early days for the project but we hope to continue to work with Condev,” said Mr Stockwell earlier on Tuesday before the liquidation announcement.

Another developer, who did not wish to be named, said the Condev meeting on Monday “was a very emotional” but the company were “open and transparent.”

“It’s been a perfect storm for them with cost increases, Covid-19, floods and everything else” the developer said.

Industry sources says one of the big problems Condev faced in trying to negotiate a rescue deal was that all the projects were at differing stages of completion from almost completed developments to barely out of the ground.

Frasers Property’s Minnippi Quarter development in Carina is almost finished while Aria Property’s Riviera at Kangaroo Point and Stockwell’s Stanford & Oxford project at Dutton Park are less advanced. The Dutton Park site was locked up and devoid of workers on Tuesday.

Condev building sites remain quiet as the company's fate hangs in the balance. Picture Glenn Hampson

“They have put up a proposal asking for money from each developer to finish off their projects,” the developer said of the rescue plan on Tuesday morning..

“And I understand all of their clients need to get on board or they won’t be able to get out of it. Those developers who are almost finished will pay less than those who have just started

“The trouble is that with all of the different capital raising processes it is not that straight forward for developers. It really is an awful process.”

The National Electrical and Communications Association, the peak body that represents electrical contractors, said it was “hearing the same excuses” for the construction industry’s predicament.

Condev building site at Varsity Lakes. Picture Glenn Hampson

NECA chief executive Oliver Judd said labour shortages, Covid-19 and rising material costs had all been offered as reasons why the company collapsed.

“It’s hard to think how these issues can be called a ‘perfect storm’ when it continues to happen year on year, or in this case, every few weeks,” said Mr Judd.

“It’s disgraceful that an industry that accounts for $360 billion in revenue, generating around 9 per cent of Australia’s GDP, doesn’t seem to have the foundation to build on to reduce collapses and stop the devastating effects of kicking the financial-loss-can down the road to the small- business subcontractors.”

NECA is advocating for the national introduction of cascading trust accounts for all projects. “If a construction project starts, contractors and workers must have the assurance that should anything happen to the major construction company, the work they have done to date will be paid for, ” Mr Judd said.