Brisbane-based mining services contractor and engineer, WDS went into voluntary administration late yesterday afternoon, six days after the company requested its shares be suspended because of contractual issues and other problems.
When the shares were suspended last Thursday, they were trading at 10.5 cents, down sharply from the most recent high of more than $1.80 a share on April 1, 2014.
The company joins the likes of Forge Group in collapsing as the resources investment boom fades. Other companies in the sector to feel the pain include the likes of Titan, Boart Longyear, WorleyParsons and ALS. But these groups remain listed and have escaped the fate of Forge and now WDS.
WDS announced late on Wednesday that that it had appointed Korda Mentha as Voluntary Administrators to oversee the company’s affairs.
“Further to our announcements of 25 and 27 August 2015, on the afternoon of 25 August 2015 the Company received advice that Eagle Downs Coal Management (EDCM) had cashed an insurance bond for $14.2 million creating a new liability on the Company,” the company said yesterday.
"This was a completely unexpected development and inconsistent with discussions that had been underway with EDCM about the future of the project,” WDS directors said.
Eagle Downs coal mine in the central Queensland coal fields, has been a troubled project for WDS with ongoing dispute with the owners, one of whom is Brazilian resources giant, Vale which owns 50%. The other 50% is owned by Aquila Resources which in turn is 85% owned by the giant Chinese steel group, Baosteel.
Directors said that since the move to cash the insurance bond (which backed the contract WDS had with Eagle Downs) the board has been discussing a range of options with EDCM.
These have included moving “to terminate the contract by mutual agreement and agree to the return of certain monies to the Company; the issuer of the insurance bond to negotiate continued forbearance in relation to repayment of the monies owed; the Company’s secured lender to continue to forbear and provide liquidity to the Company enabling it to progress a sale of the business to a strategic purchaser or effect an alternative debt restructuring."
“These discussions had been progressing expeditiously and in an encouraging, cooperative and constructive direction,” directors said.
"Until today the Company, based on the information it had received and the progress with the negotiations that had occurred, believed that it would be able to continue to trade as a going concern and remain solvent.”
But WDS directors said that its secured lender had advised the board “that it had decided against continuing to provide the Company with future drawdowns this week.”
WDS said that move “has diminished confidence that the Company’s obligations could be met. Coupled with the lack of viable and timely alternative funding, the Board is unable to reasonably form the view that the Company can remain solvent."
So that forced the board to call in administrators.
WDS has yet to file full accounts for theJune 30 year. In the half year report released at the start of the year, the company revealed an after tax loss of $14.9 million on a 35% fall in revenue to $113.2 million. No dividend was declared.
The company said it was looking for a profit of between 42 to $4 million in the June half year, making a loss for the year of $11 to $13 million.
WDS shares were sold off last October after the company revealed problems with a number of contracts, including Eagle Downs, and warned of falling revenues and losses.
