Rebuild scramble as firm topples

PRESS REPORTERS AND FAIRFAX
Last updated 05:00 07/02/2013

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Rival construction firms are set to scramble for Christchurch rebuild contracts and staff after the collapse of one of New Zealand's largest building groups.

News that Mainzeal Property and Construction had gone into receivership was described as "a bolt out of the blue", with hopes that some of its estimated 400 staff will be picked up by those working in the quake-hit city.

PricewaterhouseCoopers partners Colin McCloy and David Bridgman were yesterday appointed as receivers for Mainzeal and associated entities as a result of a request made by directors to BNZ.

Mainzeal director Richard Yan said that after "a series of events that had adversely affected the company's financial position" and a general fall-off in commercial construction work, the company was no longer getting shareholder support and could not continue trading.

The reasons for the company's collapse were not immediately clear, but there had been a suggestion that it had not been paid for part of a multimillion-dollar project due to a dispute.

Mainzeal managers referred inquiries from The Press to chief executive Peter Gomm, who did not return calls.

The company had been responsible for two of the biggest earthquake projects in Christchurch - the demolition of the Queen Elizabeth II Park (QEII) sports complex and the 17-storey Clarendon Tower.

It had also formed a joint venture with consultancy MWH as a project manager for the repair and rebuild of quake-hit properties, with Vero Insurance one of its main partners.

MWH Mainzeal programme manager Chris Pile said the receivership would not stop the joint venture from doing its work.

"It certainly will have an impact on the partnership, because we will be dealing with the receivers, but our obligations and our ability to perform the services is unchanged."

Pile said any staff who lost their jobs at Mainzeal could be directly employed by the joint venture, while Vero and AA Insurance had been informed of the receivership and were confident that it would not affect their work.

"When you form a joint venture, you do anticipate these types of situations, and I'm glad we did," he said.

Registered Master Builders chief executive Warwick Quinn said he was shocked by the failure of the long-established company.

"There was no heads-up, no warning. It was a bolt out of the blue."

Quinn said the company was in the top tier of New Zealand construction firms, and he was hopeful that staff could play a role in the rebuild.

"There's still going to be plenty of work in Christchurch on the commercial front for a good part of a decade, they're going to need the skills."

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NZ Construction Industry Council chairman Pieter Burghout said the shock news showed the fickleness of the industry.

"When you've got the second or third-largest construction company in New Zealand with an order book worth billions ... and it can collapse, that's a reminder to the whole industry that you have to run your company in an absolutely bulletproof way."

Burghout said the receivership was unlikely to hold up the Christchurch rebuild, as staff and resources from Mainzeal would be picked up by other construction firms working in the city.

"The staff are there, the tools are there, the contracts are there: the work will get done, and all that will change will be the name on the contract."

Canterbury Earthquake Recovery Authority chief executive Roger Sutton said he was hopeful that Mainzeal staff affected by the receivership could pick up work in the city if they wanted.

The demolitions of QEII and the Clarendon Tower were unlikely to be affected by the receivership.

Receiver Colin McCloy said they were committed to doing the best they could for suppliers, staff and subcontractors of Mainzeal.

"We will work closely with all parties involved with Mainzeal contracts to determine the best way forward," he said in a statement yesterday.

In a statement, the former independent directors of Mainzeal Group - including former prime minister Dame Jenny Shipley - said they had resigned from the Mainzeal board on Tuesday "when it became apparent financial undertakings from its shareholder ... were no longer in place".

The directors said they were "fully aware and very saddened" of the impact the receivership on Mainzeal staff and contractors.

MAIN PROJECTS

- In December 2011, Mainzeal was awarded the contract for the demolition of Clarendon Tower. The removal of the 17-storey central city building has been the longest demolition job in post-quake Christchurch.

- Mainzeal was in charge of demolishing the quake-hit Queen Elizabeth II Park sports complex in the city's east. The company had offered to return the site to a parkland state until options for it were considered by the council and community.

- Other construction projects managed by the company include the $15 million expansion of Barrington Shopping Centre and the construction of a $15.2m complex for St Andrew's College boarders.

- Mainzeal has many projects around New Zealand, including work for Siemens/Transpower at Benmore and a main courts complex for the Ministry of Justice in Durham St, Christchurch.

- The Press

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