Engineering company Hastie has collapsed under an estimated $500 million debt

Mark Hawthorne

May 28, 2012

Engineering company Hastie has collapsed under an estimated $500 million debt.

Engineering company Hastie has collapsed under an estimated $500 million debt. Photo: Michele Mossop

More than 2000 jobs will be axed after embattled engineering company Hastie collapsed under an estimated $500 million of debt.

In a major blow to the Gillard government, most of the job losses will come in the economically troubled states of New South Wales and Victoria.

BusinessDay believes up to 1300 Hastie Group staff in the two states will be told today they no longer have work.

The south-eastern states have borne the brunt of recent job losses in Australia, with Qantas last week axing 500 engineering jobs from its heavy maintenance division, the majority at Tullamarine. News Limited is also days away from announcing major job cuts as it restructures its largely print-based publishing business, with up to 400 editorial jobs set to go, while Caltex has flagged it might shut down its two Australian oil refineries in the next year.

News of the collapse of Hastie Group – the nation’s biggest provider of airconditioning and refrigeration systems for office towers, apartment blocks and hospitals – comes on the eve of a Labor caucus meeting in Canberra at which jobs will be high on the agenda.

On Friday, Hastie Group non-executive directors Lindsay Phillips and Harry Boon quit after a $20 million ”accounting irregularity” emerged in the books of one of the company’s Queensland divisions. That came as Hastie was in negotiations with its banks over a refinancing deal.

All four of Australia’s major banks form part of an international syndicate that has lent $500 million to Hastie. ANZ is believed to have the biggest exposure, and is owed an estimated $150 million.

At the weekend, Hastie Group executives met advisers from corporate reconstruction specialist PPB, but last-ditch

attempts to revive the recapitalisation failed. Early yesterday, the board decided to appoint PPB as administrator and McGrathNicol as receiver of the company. Both firms will be officially appointed today.

After announcing a $150 million December-half loss, Hastie Group’s ASX market value plunged to just $21 million before the company was put in a trading halt on April 13 and suspended from trading four days later. That was the result of a dispute over alleged unfair payment of ”performance bonds” to a builder in the Middle East.

The company has reported the $20 million accounting discrepancy to the Australian Securities and Investments Commission.

Hastie is a conglomeration of more than 50 business units across Australia, New Zealand and Britain. Some of its profitable units will continue to operate, as will crucial business units that provide maintenance services to hospitals and apartment blocks.

Read more: http://www.smh.com.au/business/more-jobs-gloom-as-engineering-firm-collapses-20120527-1zd6h.html#ixzz1w782uRVI

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