Engineering group RCR Tomlinson has been put into administration after being unable to secure additional funding following continued failures in solar farm projects.
A statement by RCR Interim Chief Executive Officer Bruce James said that administrators of McGrathNicol have been appointed to the RCR Tomlinson and its related companies late yesterday.
Mr. James stated that the Boards of RCR and its subsidiaries have resolved to put the companies into the hands of administrators after not being able to secure additional funds from its Banks.
RCR Collapse comes just three months after the company has raised $100 million at an immensely discounted price of $1 per share which subsequently diluted the holding of existing shareholders. Besides adding arm to the balance sheet, these funds received from equity raising were utilized by the contractor to take $57 million writedown on its two solar farms contract Daydream and Hayman based in Queensland which came more as a surprise to RCR’s management team.
Legal experts doubted if management was really not aware of the write down. They said either the management knew about the solar farms troubles and hid it, or they didn't know which is probably worse. Meanwhile, Unions fingered the way engineering group have been managing its dozens of solar projects.
In mid-October, the Electrical Trade Unions of Victoria claimed that about 130 workers were surprisingly sacked from the RCR’s Wemen solar farm with a prior notice of just 1 hour. They questioned if the company have enough funds to get its project to the finishing line.
RCR, in response to job culling, said as the project is due to be completed in January, the company decided to “downsize” the Wemen workforce. “Issues related to productivity” was another reason given in support of unexpected workers firing.
In the Annual General Meeting held on 30 October 2018, the company told that it had net cash of $54.6 million as at FY18 year end, additional insurance bonding facilities of $250 million and total syndicated facility of $431.3 million-term December 2019.
Following the resignation of RCR’s former Chief Financial Officer Andrew Phipps in November 2017, former Chief Executive Paul Dalgleish resigned in August without giving any explanation for stepping down. Even the company stood silent and did not explain any reason for the departure of its executives.
Over the past five months, the company had announced its second trading halt on 12 November 2018, explaining that it intends to give earnings update for FY19 which could possibly have associated consequences for its funding.
Today, 22 November 2018, the company said as the process of review is still under progress, it has requested for the extension of its voluntary suspension. Pursuant to the grant of voluntary suspension, the company informed that it will suspension will remain in place until the earlier of 27 November 2018 or the release of pending announcement as stated above.
The group further informed that RCR Tomlinson Limited (ASX: RCR) has been served with a shareholder class action proceeding filed in the Supreme Court of New South Wales and is in the process of review. RCR’s stock last traded at $0.870.