RCR Tomlinson in administration: Auckland's City Rail Link prepares contingency plans

Friday, 23 November 2018

Construction work on the City Rail Link in Auckland's CBD is on going.

Contingency plans are being made for part of Auckland's City Rail Link after a contractor's Australian parent company was placed in administration.

Australian stock exchange listed company RCR Tomlinson announced to the market on Thursday it had appointed administrators from McGrathNicol.

Aotea Station will be built as part of the CRL.

The engineering group company, along with design partners WSP Opus, was awarded a contract to deliver the City Rail Link (CRL) rail tracks, signalling, overhead lines, control system rooms, communications and building works in October, under a joint venture called Systems Integration, Testing and Commissioning Alliance.

The CRL is one of New Zealand's biggest transport projects, costing $3.4 billion. The 3.4 kilometre underground CRL train line will connect four stations in central Auckland. Britomart and Mt Eden stations will be redeveloped and new stations will be built at Karangahape Rd and Aotea Square.

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RCR Tomlinson, a 120-year-old company, was placed in a trading halt on November 12 and was put into administration on Wednesday.

McGrathNicol said the administration applies to all RCR Tomlinson's Australian subsidiaries.

Insolvent companies are put into administration so an independent person can assess all the options available, and generate the best outcome for a business owner and for creditors. If a company is unable to pay its debts it may then be put into receivership so assets can be sold to repay creditors.

McGrathNicol receiver Andrew Grenfell said the three RCR subsidiaries: RCR Infrastructure (NZ), RCR Building Products (NZ) and RCR Energy, were not in administration and continued to remain under the control of their boards and local management.

Auckland-based Andrew Stevens, executive general manager of RCR's New Zealand entities, said RCR's New Zealand businesses were not under administration and continued to trade as normal.

Stevens said its New Zealand business RCR Infrastructure (NZ) had the contract for the City Rail Link, not the Australian company placed in administration.

RCR Infrastructure (NZ) is owned by RCR Infrastructure (Corporate), which has an Australian address and belongs to RCR Tomlinson.

Stevens said the RCR businesses in New Zealand were 'self-funding and cashflow positive' and remained separate operating entities to those under administration in Australia.

'For us it is business as normal for our staff, our suppliers, our business partners and most importantly, for our customers.'

In a statement CRL said the RCR and Opus joint venture was for its 'C7 rail systems' contract - one of seven contracts that would be building the CRL.

The contract had a current value of $7.5m and the joint venture was 75 per cent staffed by WSP Opus, it said.

Work had not stopped on the C7 design, it said.

CRL was meeting with receivers today to discuss the ramifications of the RCR administration.

CRL chief executive Sean Sweeney told RNZ the administration of RCR Tomlinson had 'zero impact' on the CRL.

'The work they are in contract to do is to deliver a design solution for the rail systems contract. And that work is to be completed next March,' Sweeney said.

RCR Tomlinson's chief financial officer Andrew Phipps resigned after four years earlier this month, citing 'personal circumstances'.

A first statutory meeting of RCR Tomlinson creditors was expected to be held on December 3.

The administration came just two days after RCR Tomlinson was served with a shareholder class action, filed in the New South Wales Supreme Court, on behalf of investors who bought ordinary shares between August 11 last year and July 27 this year.

An anonymous source, working on the CRL, said the work RCR would be doing was one of the last parts to be carried out, after all the construction work was completed.

Even if the New Zealand companies were affected it would not impact the delivery time frame as there was 'a massive lead time' to find a new contractor.

The CRL is set to open in 2024.

On Friday morning, a worker from Downer NZ - one of the CRL's construction partners - who was controlling traffic management around the CRL project said she had read about RCR Tomlinson going into administration in the news.

She was not concerned for her own company as RCR Tomlinson was on a different contract to Downer NZ, the worker said.

Downer had been working on the project for about six months and everything was going well, she said.