Ebert Construction is the latest local building firm to fall over in the midst of a major boom, with receivers appointed to the parent company as escalating costs in some poorly performing projects in Auckland would have added to the firm's losses.
PwC's Lara Bennett, John Fisk and Richard Longman were appointed as receivers to Wellington-based Ebert Construction Ltd, the professional advisory firm said in a statement. The board made up of managing director and co-founder Kelvin Hale, chair Nigel Foster and independent director Mike Phillips, made the recommendation after being told last week that a number of already-struggling projects in Auckland would probably add more stress on the books with costs set to substantially increase.
Even with its well-performing contracts, "the directors formed the view that the company could no longer continue trading given the impact of the actual and anticipated losses," PwC said.
The appointment comes just over a month after Ebert Construction renewed its loan with Bank of New Zealand, which first registered itself as a secured party in July 2013, the Personal Property Securities Register shows. That was renewed on June 26 this year and is set to expire in 2023. A separate facility with BNZ's wholesale financial services was registered in October last year and runs to October 2022, letting Ebert sell accounts receivable to the bank, a service known as factoring to speed up a firm's cash flow.
The most recent security entered on the register was lodged today by Tower Cranes NZ, an Auckland crane hire operation, with an accompanying note saying "they owe us money for services we have provided them. Approximately $400,000".
Managing director Kelvin Hale registered as a secured party on July 24.
Fisk told RNZ's Morning Report programme the pressure was most acute in Auckland with supply chain issues and difficulties finding staff. The board acted responsibly in seeking receivership with "significant losses" to come on some of the contracts, he said.
Ebert Construction is the latest building firm to come under strain from escalating building costs, with Fletcher Building the highest profile when it booked almost $1 billion of losses over two years from its Buildings + Interiors division as fixed-cost agreements meant it couldn't pass on the rapid increase in wages and building product prices.
Counties Manukau District Health Board is among the entities registered as a secured party for services in building the hospital's acute mental health unit. The DHB's board noted delays to the unit's construction in its May and June meeting agenda papers.
Ebert Construction's website no longer names its projects, but cached versions show work spanning from residential apartment blocks, small $1 million industrial sites, big-box retail developments and $30-$40 million dairy factory upgrades for the likes of Fonterra Cooperative Group and the other major processors.
The company has gone down the route of carving out entities before. In 2002, Trebe NZ appointed liquidators after it ceased trading two years earlier. At the time of that appointment, the entity, formerly Ebert NZ, was embroiled in a leaky building claim over the Marion Square apartment block built in the mid-1990s.
Ebert was also fined $45,000 and paid $55,000 in reparation after pleading guilty to a workplace injury in December last year.