News Non-Life26 Nov 2018

Australia:Insurers pay out millions on projects of collapsed engineering group

26 Nov 2018

Solar farm developers that hired Sydney-headquartered engineering group RCR Tomlinson are calling on the company's bank guarantees and insurance bonds, potentially forcing banks and insurers to pay out tens of millions of dollars, after the engineering group went into administration last week, reports The Australian Financial Review.

Contractors who provided workers to RCR's projects started pulling them off sites last week after insurance group QBE said it would no longer cover any debts incurred with the engineering group.

RCR Tomlinson will be sold after being put into administration because it could not afford to complete its solar farm projects, despite the company raising A$100m ($72m) from investors in August.

It is understood that RCR experienced a crunch in working capital after delays on several solar projects, forcing it to pay liquidated damages to clients. The company did not have enough cash to pay the damages and keep paying its workers and suppliers to complete the projects, which included nine solar farms in Queensland, Victoria and Western Australia.

RCR's lending syndicate of five institutions, led by CBA, refused to loan it more money after it went into a trading halt on 12 November, forcing it into administration on 21 November.

RCR first signalled it was in financial difficulty when it went into a trading halt on 30 July that lasted a month.

RCR, which was working on nine Australian solar farm projects worth more than A$1bn before it collapsed, had an A$295m bank guarantee facility and an A$250m insurance bonding facility to guarantee obligations to clients. As of 30 June, A$157m of the bank guarantee and A$196m of the insurance bond had been drawn.


 


 

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