The big Perth-based engineering and construction company RCR Tomlinson has gone into administration just months after raising $100 million in fresh capital from its shareholders.
In a statement to the ASX, RCR said it had appointed administrators McGrathNicol, having entered a trading halt last week.
“Further to the company’s trading halt and announcement on November 12, 2018, the company has not been able to secure additional funding,” RCR said.
“As a result, the boards of the group companies met and resolved to appoint administrators.”
The move stunned investors who kicked in another $100 million in an equity raising in late August.
The company’s board went to shareholders for fresh capital, having been forced to take a $57 million write-down on the value of its Daydream and Hayman solar farms in Queensland earlier this year.
From bullet-proof to administration in weeks
Investment management company Allan Gray’s managing director, Simon Mawhinney, said the collapse was astonishing and an absolute disaster for shareholders.
“We’ve never seen a turnaround like this,” Mr Mawhinney said.
“After the $100 million they raised, they allegedly had $140 million of net cash and a seemingly bullet-proof balance sheet.
“To go from audited financial statements released to the ASX in August, signed off by the board and their bankers, as well as the positive AGM commentary in October, defies belief.
“It’s very hard to say what’s happened. We have no idea. Something terrible has happened on the watch of the current board.”
RCR Tomlinson has more than 3400 employees across the nation and specialises in big infrastructure projects in the mining and energy sectors.
It is one of Australia’s oldest engineering businesses, tracing its origins back 120 years when it was founded by brothers Ernest and Edward Tomlinson.
The company website lists its current projects as the Melbourne Underground Rail Loop upgrade, the Auckland City Rail Link, property maintenance for big public hospitals in Melbourne, as well as a capital works program for Melbourne Water.
It is also involved in the construction of numerous solar farms across Western Australia, Queensland and Victoria, a power plant in Indonesia and a lithium-processing plant in the Pilbara.
Shareholders face wipe-out
Mr Mawhinney said while some creditors may get something out of the administration, history shows shareholders are likely to be wiped out.
“It’s hard to believe there’s nothing left, but I can’t recall a company going into administration and shareholders coming out with anything,” he said.
Allan Gray is RCR’s third biggest shareholder, with 7.8 per cent of the registry, behind Perpetual and the Pendal Group – the old BT Financial Group.
Mr Mawhinney said while he avoided the capital raising, he invested recently believing the company had good prospects with revenues of almost $2 billion last year.
The $100 million was raised at $1 a share and underwritten by Macquarie Capital.
Shareholders were told the capital raising was specific to cost blowouts at the two Queensland solar projects.
The company had a market capitalisation of $240 million when it was placed in administration, with its shares trading at 87 cents.
At its peak in August last year, shares were trading at $3.50 and the company was valued at almost $1 billion.
The share price crash and last week’s trading halt prompted lawyers Quinn Emanuel Urquhart and Sullivan to file a class action on behalf of investors in the NSW Supreme Court.
Mr Mawhinney said he was unsure what the legal action would achieve, but welcomed it.
“They should go after the directors and their houses. They have a lot to answer for and need to be held to account.”