More bad news from embattled civil and mining contractor Brierty as the company was put into the hands of administrators late yesterday.
Trading in its shares was halted at its request yesterday morning after the company revealed more problems in parts of its business.
Its shares last traded at 8 cents, 59% down on the year high of 19.5 cents hit last February.
Brierty said it was preparing to make an announcement. That came late yesterday afternoon in Perth with the news that administrators had been appointed.
Brierty said the decision came from the cumulative effect of a number of factors which had damaged cash generation and profitability.
They included recent difficulties in executing civil works profitably, an inability to secure sufficient new work because of uncertainty about the company’s financial position, and a sudden and sharp decline in Darwin land sales.
The board has appointed KPMG’s Matthew Woods, Hayden White and Clint Joseph as administrators. The shares were then suspended.
It’s the second major company to fall into administration since June when the Ten Network collapsed under the pressure from shareholders Lachlan Murdoch and Bruce Gordon who were trying to set up the TV company for a cheap takeover.
That situation is very different to what Brierty has been experiencing.
“The company’s directors and management remain committed to working with the administrators to achieve the best possible outcome for all stakeholders,” Brierty said in yesterday’s second statement of the day.
“The administrators will immediately undertake a financial and operational assessment of the company and intend to continue to operate the company’s business on a ‘business as usual’ basis until further notice.”
It said administrators had not been appointed to Northern Territory property development subsidiary Bellamack, which continued to trade.
Brierty got into financial trouble last year after losing $22 million on a road project.
The contractor did a rescue deal with Bankwest in July for a $6 million debt facility which enabled it to continue operating.
Brierty last week released unaudited annual results which recorded a net loss of $2.9 million.
The net loss figure included a write-off of $10 million in deferred tax losses. The previous year’s loss was $52 million.
The deal had been put in jeopardy by Rio Tinto suspending Brierty from a Pilbara mining contract.
It went ahead when Brierty was cleared to restart operations at the Western Turner Syncline Stage 2 project. Now the future of that contract is up in the air again.
Brierty also planned to quit its South Perth headquarters to cut costs, relocating to premises which houses its workshop.
The net loss figure included a write-off of $10 million in deferred tax losses (meaning the company is no longer assured it will generate profits to use the tax losses against). The previous year’s loss was $52 million.
Revenue fell 41% to $126 million. Profit before tax of $7.1 million, bolstered by a $5.8 million upward valuation of plant and equipment, turned around a $65 million loss.
Gross debt had been cut by $7.4 million to $41.3 million
The irony for the company is that it is on the edge of collapse just as the contracting sector is reviving as resource companies restart investment and spending after the bitter recession.
