TODAY |

Contingency plans considered for Auckland's City Rail Link as financial woes cripple engineering firm

A 120-year-old Australian engineering firm that was set to help build the underground network for Auckland's City Rail Link has gone into administration, creating some doubt about whether the project can now stay on schedule.

New Zealand-based RCR Infrastructure, in conjunction with Opus International, won the contract in October to have the rail link ready by to open by 2024.

But its parent company in Australia, RCR Tomlinson, was on Wednesday placed in the hands of administrators McGrathNicol, who said they were immediately starting a sales process for the business and urgently seeking funding from financiers.

RCR Tomlinson, in conjunction with Opus International, was to have the rail link ready to open by 2024. Source: Breakfast

"The administrators will work closely with RCR's employees, suppliers and customers to quickly stabilise operations and to determine the appropriate strategy for the business," McGrathNicol said in a statement.

The company has 3400 staff, mostly in Australia, who are now in limbo as the sales process begins.

City Rail Link officials said in a statement that they are meeting today with the receivers to "discuss the ramifications" the parent company's woes might have on the Auckland project, which has not stopped in light of this week's revelations. RCR Infrastructure is not in administration and is still trading, officials stressed, but they are "assembling a range of contingency plans". 

The Australian parent company of RCR Infrastructure has gone into administration, putting work here under a cloud. Source: 1 NEWS

The appointment of an administrator for RCR Tomlinson came just two days after the firm 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.

ONN 1 News at 6 promo image
For more on this story, watch 1 NEWS at 6pm. Source: 1 NEWS

The company's shares closed at $3.44 NZD on March 1 and traded at 93 cents on November 12, when trading was suspended as management sought additional funding.

RCR Tomlinson recently sought to raise $106 million by offering more shares at $1 each but raised $90 million.

The company had revenues of almost $2.1 billion NZD in 2017-18, but also reported cost overruns at the Daydream and Hayman solar farm projects in Queensland, resulting in cumulative write-downs of $61 million.

As recently as this week RCR was posting help wanted ads for the City Rail Link project. The variety of jobs ranged from engineers to health and safety managers and quantity surveyors, Radio New Zealand reports.

Opus International, which won the City Rail bid alongside RCR, is currently responsible for 75 per cent of the project's staff, City Rail Link officials said today. 

AAP contributed to this report.

But rail link bosses are confident the project isn't at risk. Source: 1 NEWS