After months of trauma, RCR Tomlinson finally submits to administrators
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The unions had a feeling something was up: engineering company RCR Tomlinson has just gone into administration, weighed down by cost blowouts at its solar projects.
Last week the Queensland branch of the Electrical Trades Union (ETU) seized on a trading halt as “evidence the company is in danger of going into receivership”.
They weren’t quite right: on Wednesday evening RCR (ASX:RCR) voluntarily called in administrators from McGrath Nicol Restructuring.
“The administrators are undertaking an assessment of the business and urgently seeking funding from the RCR Group’s financiers,” McGrath Nicol said.
“A sale process will be commenced immediately.”
A meeting for creditors takes place on December 3.
The corporate collapse comes two days after a class action was launched by shareholders angry about a “catastrophic decline in their share value”.
The $230m company went into a trading halt that would last for a month on July 30.
In that period the CEO resigned, the company revealed that it would have to take a $57m write down on two solar projects, and that it needed to raise $100m to cover those losses.
The write downs were over the Daydream and Hayman solar farm projects in Queensland.
When the stock returned to trade in late August it plunged over 60 per cent.
In August, just before the write down and the release of the company’s annual report, CEO Paul Dalgleish, who’d led the company for 10 years, resigned. The company has not provided a reason why.
In October, the company unexpectedly fired 115 electricians at its Wemen solar farm in Victoria.
RCR went into a trading halt on November 12 pending the release of full year 2019 guidance, but that turned into a suspension on November 14 as the company reviewed its earnings and “the associated consequences for its funding”.
As at June 30, 2018, the company had net assets of $381m.
Class action still on
Damian Scattini, a partner at litigation firm Quinn Emanuel Urquhart & Sullivan which is running the class action, says the administration will stay the suit temporarily but won’t stop it.
“Certainly will be a hue and cry about a cap raise of $100m in August and administration in November,” he told Stockhead.
The suit claims the board knew or should have known about the write downs and told the market earlier.
“What they claim was the surprise that the costs had overrun. We say that they knew or ought to have known and discussed them to the market in a timely manner.”
The class action is being led by a self-managed super fund trustee and funded by Burford capital.