OSTWALD FAILURE: 210 more workers face the sack
MORE than 200 Ostwald Bros employees are facing the sack, with administrators of the embattled civil construction company to recommend the company be liquidated at a creditors' meeting next week.
The employees were kept on by administrators PricewaterhouseCoopers after they took control of the company in late August in an effort to improve the company's bottom line and complete several contracted projects.
At a meeting at Toowoomba's Empire Theatre at 2.30pm on Thursday, November 30, it will be left up to the company's hundreds of creditors to decide what would be in their best interests - to restructure the company through a deed of company arrangement, for the administration to end, or for the company to be liquidated.
The Chronicle has obtained a copy of PricewaterhouseCoopers' creditors' report, which will be discussed at next week's meeting.
While administrators received 39 confidential expressions of interest from other companies interested in restructuring the company, purchasing it, or parts of the company, only 23 were willing to sign confidentiality agreements to gain access to Ostwald Bros' financials.
In the end, no company was interested in purchasing the business as a whole, nor have there been any deeds of company arrangement received by the administrators.
PricewaterhouseCoopers has recommended that since no deed of company arrangement has been put forward, and the company is insolvent, Ostwald Bros should be wound up and placed into liquidation.
Company financials show Ostwald Bros, run by directors Daniel, Brendan and Matthew Ostwald, hit its peak in 2014 after winning a number of large construction contracts, generating $382 million in revenue for the financial year, with nearly 1500 employees and about 1000 contract or subcontract employees.
Revenue declined by 27% the following year, followed by a further 50% in 2015/16 and 16/17 financial years.
Ostwald Bros made a $19.2 million profit after tax in 13/14, $15.2 million in 14/15, before hitting financial trouble.
Considerable project losses contributed to significant net losses of $26.3 million in 15/16, a $292,000 loss in 16/17, and a $5.1 million loss from May of this year to present day.
It all came crashing down when the company was placed into voluntary administration on August 25.
According to the creditors' report, the Ostwald brothers, as directors, advised PricewaterhouseCoopers the company suffered large losses around 2015/16, the most significant being their APLNG Eurombah Creek contract where the company had costs of $135 million and revenue of only $112 million.
That was compounded by Cockatoo Coal going into administration in 2016, where Ostwald Bros lost a further $5 million.
Despite downsizing, the company encountered problems with cash flow as a result of the withholding of July and August progress claims by Nexus and Seymour White to the value of $15 million.
Nexus and Seymour White dispute the debts owed to Ostwald Bros.
The death blow came in August, when the Australian Taxation Office issued Director Penalty Notices in relation to a $4.2 million debt owed by the company to the ATO.
The DPNs made the three Ostwald brothers personally liable for the ATO debt after 21 days, unless the debt was paid, or the company was placed in administration or liquidation.
Investigations by PricewaterhouseCoopers found the company's books were three months out of date at the time of appointment.
In the event the Ostwald Bros is liquidated, the PricewaterhouseCoopers report notes that there "may be claims that a liquidator could pursue against directors in respect to trading the company while insolvent".
The company currently owes creditors $62.5 million, made up of $30 million owing to the ANZ bank as a secured creditor, $9 million in employee entitlements assuming all are made redundant, and $23.5 million to unsecured creditors.
Satellite venues to allow creditors in other parts of the country to take part in Thursday's creditors' meeting will be held at Christie Conference Centre, Level 2, 320 Adelaide Street, Brisbane and the Grafton District Services Club, 105-107 Mary Street, Grafton.