Australian building giant Probuild slumps after racking up losses

Probuild collapsed. Photo / Provided

One of Australia’s leading construction companies. Probuild, which works on a number of high-profile projects across the country, collapsed.

Deloitte was appointed administrator to handle the company’s collapse after Probuild’s parent company, WBHO South Africa, announced it was withdrawing all financial support to the company.

“We are caught in a set of circumstances that are not of our making,” a Probuild spokesperson said.

Probuild Caulfield Village project.  Photo / Provided
Probuild Caulfield Village project. Photo / Provided

“We are working closely with the administrator on a number of plans to protect our customers, contractors and employees.

“The Probuild brand is strong and we intend to maintain it. We have several options to raise the capital needed to continue as a premium Australian construction company. All will be continued.”

On Wednesday evening, trades were called out of job sites across the country and workers were seen removing equipment and tools from job sites.

Traders were pictured collecting tools from Cbus Property’s 443 Queen St project in Brisbane.

In Melbourne, at the site of the Far East Consortium’s West Side Place project, which is a four-tower, $2 billion development, contractors were seen driving around in their private vehicles to collect tools and personal equipment.

Melbourne University Victoria City West Tower Project.  Photo / Provided
Melbourne University Victoria City West Tower Project. Photo / Provided

The shocking collapse is believed to have come after a disastrous skyscraper project dragged the company into massive debt.

Probuild raked in $1.3 billion in revenue and made $4 million in profit last year, but the 443 Queen St project, which involved high-end apartments, lost as much as $120 million.

The property comprises 264 luxury residential apartments, but with delays and technical issues it is already well behind its end of 2021 completion date.

Originally announced as Brisbane’s first high-end subtropical residential tower, with city views, the future of the building now hangs in the balance.

The waterfront complex has cost the company’s Queensland arm, PCA QLD, more than $28 million, with sources estimating it could reach $120 million.

Probuild’s parent company had also raised concerns over the ‘troublesome’ Western Road upgrade project in Sydney.

It had forecast a loss of $161 million in June last year and WBHO was forced to shell out $141 million to secure completion.

Probuild Constructions (Aust) reportedly injected $15m into the company last year as part of a recapitalization to tackle losses at the Queensland division.

But Probuild’s South African parent company blamed the Australian government’s “hardline” approach to handling Covid as part of the collapse problem.

443 Queen Street Brisbane near the CBUS Customs building.  Photo / Provided
443 Queen Street Brisbane near the CBUS Customs Building. Photo / Provided

He appointed Deloitte directors after bailing out the Australian construction firm up to $132.1 million over the past four years.

He said Probuild had “severely depleted” its resources and the Australian branch’s losses would have a “significant” effect on WBHO’s financial performance.

“Effective February 22, 2022, the company … will no longer provide financial assistance to (the Probuild holding company) WBHO Australia,” the WBHO said in a statement.

The loss of Probuild will send shockwaves through the construction industry as it was one of the few major builders, such as Multiplex, Lendlease, CPB and John Holland, able to deliver large-scale projects .

Probuild’s current list of projects includes the Victorian Police Headquarters, which is 46 stories high, the global headquarters of pharmaceutical giant CSL in Melbourne, the Curtin University Exchange, as well as the Greenland Centre, which is Sydney’s tallest residential building.

Other projects include a 28-storey building that will be Melbourne’s tallest vertical campus for Victoria University, a 65-storey residential building in Melbourne called UNO, and Caulfield Village, which was to feature multiple campus-style towers, offering more of 430 apartments to be built. .

In Sydney, Probuild was also in charge of a flagship project in Darling Harbour, a 30-storey building comprising a hotel and serviced apartments, a state-of-the-art IMAX theatre, retail and entertainment spaces and 10,000 m² of renovated and improved spaces. public domain.

While Probuild directly employs just over 500 people, the impact on thousands more working as contractors is feared.

A worker told The Australian that hundreds of thousands of dollars had been left out due to unpaid bills.

“It’s going to be in the millions, what trades are due,” they said.

Last year, the federal government blocked the $300 million sale of the company to China State Construction Engineering Corporation, citing national security concerns.

Before the collapse, WBHO had signaled that it would withdraw Probuild from the Queensland and WA markets by the end of financial year 2022.

“The intention of the company was to see a decline in the backlog as we reduced our exposure to high-risk projects,” she told the Australian Financial Review on Wednesday.

“However, the search for acceptable projects has been made more difficult with the procurement activity and the number of available projects impacted by Covid-19.”

He also blamed the government’s “tough stance” on dealing with Covid, which caused delays to projects but also made it difficult to secure new work.

“The Australian Government’s hardline approach to managing Covid-19 through a combination of border restrictions, instant lockdowns and mandatory work-from-home regulations for many sectors, has had a huge impact on property markets as well than on other industries such as the entertainment industry,” WBHO said.

The project that would have led the company to unravel.  Photo / Provided
The project that would have led the company to unravel. Photo / Provided

“The company’s project delivery capability is of particular concern, as it has been negatively impacted by unforeseen Covid-19 restrictions, the contracting environment and the increased difficulty in lifting warranty facilities needed to secure new work. .”