Building giant Probuild plans to call in administrators

Administrators have been appointed to Probuild after its South African parent pulled the pin on further financial support.

Probuild, one of the country’s largest construction companies, has collapsed into administration after its South African parent said it would stop financially supporting the group.

Deloitte is assisting the company and is likely to be appointed administrator on Thursday after Johannesburg-listed Wilson Bayly Holmes-Ovcon said on Wednesday it was withdrawing further funding.

Probuild employs thousands of workers around the country and is working on major construction projects in Brisbane, Sydney and Melbourne, including the global headquarters of pharmaceuticals giant CSL.

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 asked not 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 declined to comment.

The company is 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

Probuild was set to be sold to the China State Construction Engineering Corporation last year but the sale was blocked by the Foreign Investment Review Board on national security grounds.

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 on Wednesday amid speculation the South African company 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.

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

The penthouse at 443 Queen St. Picture: Supplied

“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.”

Probuild did not respond to a request for comment. A spokesman for the Queensland Building and Construction Commission said the watchdog has been in contact with the company directors and would continue to monitor the situation.

The spokesman said that if builders, subcontractors or suppliers had concerns about non-payment, they were 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 more than $4m but took a $45m hit on the 47-level Queen St project amid design difficulties and a two-year delay.

Its 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 St 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 continued 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, NSW, 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 about $5bn.

The company has thousands of apartments under construction and more than 370,000sq m 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 Towers at Elizabeth Quay, Stage 2 and 3. It is also building the 450-room W Hotel on Darling Harbour in Sydney.