Sydney-based engineering company RCR Tomlinson has collapsed after failing to find extra funding on top of the $100 million raised in August in the wake of a third solar power plant debacle.
That money now seems to have gone in the space of two months – the fundraising was completed in late September, now the company has gone bankrupt.
The entitlement offer offered RCR shares on a one-for-1.65 basis at $1 each. The price was a 64% discount from the stock’s last trade of $2.80 before the first lengthy suspension on July 30. That discount was a bit of a giveaway about the level of desperation for RCR’s board.
The shares fell to 87 cents on Monday, November 12 which was under the issue price.
The next day directors asked for the shares to be suspended from trading and it was downhill ever since.
At 87 cents the company was worth $231 million.
The offer was underwritten by Macquarie Capital who won’t be much pleased when some shareholders come calling to complain.
A statement from RCR interim chief executive Bruce James yesterday said administrators from McGrathNicol were appointed to the company and its subsidiaries late yesterday.
Mr. James said directors took the step because the company had not been able to secure extra funding.
RCR has a significant presence in WA’s resources and infrastructure sectors, including a long-term service contract with the Water Corporation in Perth.
The collapse saw RCR workers and contractors withdrawn from at least five solar power projects on Thursday morning
Union officials said workers from labor hire firms Inselec, Mass Recruitment, and WorkPac were pulled from the Haughton, Clermont, Emerald, Collinsville and Darling Downs solar projects.
RCR Tomlinson sought a trading halt early last week because of problems with a Victorian solar project had deepened to the point where the company needed more funding.
The company asked for its shares to be firstly suspended and then on Tuesday of this week sought a further week’s suspension so it could work on obtaining new finance.
It failed, and on Thursday it announced it had gone into administration, appointing McGrathNicholls as administrators.
The company’s struggle to remain afloat have been compounded by class action on behalf of investors launched by legal firm Quinn Emanuel Urquhart & Sullivan over the dramatic fall in the company’s share price in July.
The fall below the $1 issue price in early November was a signal that all was not well at the company.
In August RCR Tomlinson announced a major write-down of $57 million from the $300 million contracts for the Hayman and Daydream solar projects, a result it blamed on unexpected costs. The $100 million capital raising was completed in late September and didn’t last long. Now for the questions.