Council-owned roading company in Tararua and Central Hawke's Bay, Infracon, is to go into liquidation, putting the future of more than 200 jobs up in the air.
The company's board today recommended a liquidator be appointed.
Infracon is one-third owned by a Central Hawke's Bay District Council company, with Tararua District Council owning two-thirds.
Central Hawke's Bay Mayor Peter Butler said the councils were "saddened by the recommendation received from the directors of Infracon Ltd that the shareholders should place the company into liquidation".
"This creates real worry for Infracon staff and their families," Butler said.
"At least 210 employees who will be affected from Infracon branches in Hastings, Waipukurau, Dannevirke, Woodville and Palmerston North were advised today of the impending liquidation of the company. They now have uncertain futures while the liquidation proceeds."
Interim Infracon board chairman Tararua Mayor Roly Ellis said a combination of factors had led to today's recommendation to shareholders.
"Infracon has had losses for the previous three years and the cashflow position has meant that the company cannot continue to trade as it has been," Ellis said.
Advice to the shareholders from the interim Infracon board indicated that the long-term prospects for Infracon remained extremely difficult and forecasts indicated losses continuing for the next two years, he said.
After receiving a letter from its bank, withdrawing financial support from Infracon, further negotiations by the interim board and the bank had been unable to resolve the situation. The interim board was in the difficult position of having to decide to make the recommendation to the shareholders to bring in the liquidator after considering all practical options.
"In the last two months the interim board has worked closely with the current management on restructuring the company. However, the situation could not be resolved and the bank would not maintain support," he said.
The two councils would work closely with the liquidator and those staff affected to try to save jobs.
Mayors Ellis and Butler said both councils would do everything so that essential services were maintained.
- The Dominion Post
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