Engineering company Hastie Group is in the process of being carved up, with its mechanical, electrical and plumbing businesses suspending operations but other divisions continuing to trade while they seek a new owner.
The directors of Hastie Group yesterday appointed PPB Advisory as voluntary administrators of all the Australian entities in the group.
Hastie, which has operations in WA and has worked on the Gorgon LNG project and Perth Arena, designs, manufactures and installs industrial and commercial air conditioning systems.
PPB said it would suspend operations in the company’s mechanical, electrical and plumbing divisions, which employ 2700 people in Australia and nearly 2000 in the Middle East.
"Regrettably, the administrators have no option but to suspend operations whilst they assess the financial position of each company," PPB said.
"The administrators will make every effort to assist employees."
McGrathNicol was subsequently appointed as receivers and managers over 11 of Hastie’s subsidiaries including its Australian-based refrigeration and maintenance services divisions.
McGrathNicol partner Peter Anderson said Hastie’s subsidiaries Spectrum Fire and Safety, Hastie Services, Gordon Brothers Industries and Austral Refrigeration, which employed nearly 1,300 people, would continue operating on a “business as usual” basis.
“I would like to assure customers and employees that our appointment allows the Spectrum, Services, Gordon Brothers and Austral businesses to continue to operate with minimal disruption while we run an orderly sale campaign for each business,” Mr Anderson said.
“We do not expect to make any significant structural changes to the businesses and their workforces.”
Hastie had been in talks with banks and new investors to extend its loans last week, but they broke down when it discovered an employee had been falsifying accounts.
PPB's advisory chairman Ian Carson said it needed to confirm Hastie's ability to fund its mechanical operations before they could resume business.
"In the meantime, we remain acutely aware of Hastie Group's role on major construction projects and are assessing those urgently," he said.
"We will provide an update to employees and other affected parties as soon as possible."
A sale process for subsidiary Austral began before administrators were called in, and a deal was expected to be completed quickly, McGrathNicol said.
Hastie's operations in New Zealand, the United Kingdom and Ireland are expected to continue to operate as normal.
Hastie expects first half earnings to be reduced to zero, following two write-downs in November and a $150 million loss for the six months to December 31.
The accounting irregularities, which date back to the 2008/2009 financial year, are expected to add a $20 million charge to its profit for the current financial year.
Federal Employment Minister Bill Shorten said the government had been in contact with the administrators and was working with them to ensure affected workers were provided with all available support.
“I am particularly disappointed that these potential job losses have been brought about by poor financial management in the company," he said.
“The administrator has advised us that they are doing all they can to sell the as many of the subsidiary companies as possible as going concerns to ensure as many workers as possible retain their jobs.”
Meanwhile the Electrical Trades Union has applied to the industrial umpire to reverse the stand-down of more than 300 workers caught up in the move.
The workers at Watters Electrical have been stood down without pay for 28 days after Hastie went into voluntary administration.
The ETU's Victorian branch made an application to Fair Work Australia to reverse administrator PPB Advisory's decision to stand down the Watters electrical workers.
ETU Victorian branch secretary Dean Mighell said: "The administrator has committed an act of corporate bastardry to our members at Watters by keeping them notionally employed but in reality having them stood down without pay."
