Indonesian tender blamed for Henry Walker’s demise: Report
Wednesday, June 29 2005 - 02:14 AM WIB
The company executed the contract in May last year before it secured financing for the US$130 million needed for the project, The Sydney Morning Herald quoted administrator McGrath Nicol & Partners’ report released Tuesday.
By the time administrators were appointed on January 31, the company had already invested US$70.6 million in the contract and another US$84.4 million was due in April.
Despite a capital raising of A$42 million in mid-2004, this placed "considerable pressure" on the company's cash reserves.
After reviewing the financial results of this poor decision, McGrath said yesterday that HWE shareholders were unlikely to receive any payout from the company.
Before entering administration, HWE Mining was Australia's largest services provider to the iron ore sector. The mining division employed 3000 on projects with companies such as BHP Billiton, Rio Tinto, Newmont, Newcrest and Portman. It had revenues of about A$700 million a year, accounting for 62 per cent of HWE's total revenue.
Several unnamed parties have expressed interest in buying the division, which the administrators expect to sell by September.
The administrators have managed to sell nearly A$150 million of the company's assets in a move that has saved 1500 jobs so far, but they do not expect to get the more than A$300 million needed to begin repaying shareholders.
While the Bengalon contract was the main reason for HWE's downfall, the administrators noted the company had other problems, including poor financial reporting between business units, poor integration of acquisitions, and tendering contracts at prices so low they resulted in losses.
McGrath recommended creditors execute a deed of company arrangement at a July 8 meeting, rather than end the administration or wind up the company.
Bengalon coal mine is operated by PT Kaltim Prima Coal, a subsidiary of publicly listed PT Bumi Resources Tbk. (*)