Mahercorp founder working on turnaround plan

The founder of the Victorian home builder says it can keep operating and get customers’ houses completed despite the forces ripping through the industry.

The founder of Victorian home builder Mahercorp, Steve Maher, has outlined a preliminary plan to take back control of the company from administrators Cor Cordis.

The builder is the parent entity of two Melbourne builders – Urbanedge Homes and Eight Homes – that specialise in construction in the city’s northern and western suburbs and fell into administration last month as industry pressures became too much to bear.

At a first meeting of creditors was held on Thursday, administrators Jeremy Nipps, Rachel Burdett and Barry Wight said that they had received numerous expressions of interest and the founder’s preliminary draft proposal of a deed of company arrangement.

“As I promised, I have submitted a plan to the administrators that will put Mahercorp in a better position to keep operating and get customers’ homes built during this really difficult time in the construction industry,” Mr Maher said.

“I’m optimistic – I think my proposal means that we’ll be able to keep building and finish homes, give our suppliers and trades more certainty and avoid adding to the challenges being faced by industry right now,” he said.

“That plan is in the hands of the administrators right now, so there’s not much more I can say ahead of their report and recommendations.”

Cor Cordis said it was continuing to work through a proposed restructure of the group and was unable to disclose any further details regarding the voluntary administration process. A report will be made available to creditors on May 22 ahead of a vote on the company’s future a week later.

Mahercorp founder Steve Maher.

Mahercorp is one of a series of home builders to hit the skids as pressures continue to mount on the industry, which has been slugged by higher interest rates, rising labour costs, and subcontractors hitting the wall.

Mahercorp’s administration meant its home-building operation was put on hold for more than a month, affecting about 730 homes that were under construction.

It came just weeks after rival builder Porter Davis Homes went into liquidation, leaving more than 1700 incomplete homes across Victoria and Queensland, and a series of high-rise builders also collapsing.

The Mahercorp home builds are believed to be insured, unlike in the liquidation of Porter Davis, where the Andrews government had to step in to help cover uninsured customers.

In a letter to customers when he called in administrators, Mr Maher said the company he established in 2002 had not collapsed, nor was it in liquidation and he was working on plans to rescue the builder.

Mahercorp’s final accounts highlight the hit from Victoria’s lockdowns. The 2021 accounts show it was profitable but pressures were mounting from the state’s strict pandemic lockdowns.

Mahercorp made a $1.45m profit in the year ended June 2021, a bump on $783,385 in 2020.

The company called out the volatile impact of the coronavirus pandemic on its operations.

“Despite an initial downturn in activity as a result of restrictions on building sites, as well as decreased consumer confidence, the government’s $25,000 HomeBuilder grants which were announced on 4 June 2020 saw a large influx of sales for new builds to begin,” the accounts said.

The grants fuelled unsustainable growth in the industry as builders contracted for work that would become unprofitable. Mahercorp was also hit by the Victorian government-imposed lockdown in February 2021, which worsened supply chain problems.

“Despite the construction boom within Victoria currently, there has also been timber and supplier shortages resulting in backlogs of up to six months across the industry,” the accounts said.

The company warned of the impact.

“These shortages have also resulted in higher costs, and ultimately lower margins,” the accounts said.