Century-old builder Clough Group collapses

One of Australia’s oldest building companies has collapsed, with the Clough Group falling into voluntary administration after a takeover deal fell apart.

The 102-year-old building and engineering company, which is building the Australian Government-backed Snowy Hydro 2.0 energy project, was set to be acquired by Italian construction group Webuild.

The latest blow to the building industry puts the jobs of more than 1,200 Australians in jeopardy.

The Perth-based and South African-owned engineering contractor has been involved in numerous large-scale infrastructure projects around the country, including hydropower, energy, transport and mining.

Rising interest rates, cost pressures, and supply chain obstacles and labour shortages caused by a pandemic and international tensions and conflicts, have wrought havoc on the building industry over the past couple of years. Construction costs nationally have soared at around double the wider inflation rate, rising by 11 per cent in the past 12 months and showing no signs of slowing.

After a conditional deal had been struck on 8 November, a statement on Webuild’s website scuttled Clough’s final hopes of survival.

“The parties have jointly determined and agreed that there is no reasonable prospect of that acquisition proceeding through to a successful completion,” the statement read.

“The parties have therefore unconditionally agreed to terminate the SPA (sales and purchase agreement) with immediate effect.”

Dyldam Developments, Hotondo Homes franchise Tasmanian Constructions, ABD Group, Privium BA Murphy, Pindan, Oracle Platinum Homes, Pivotal Homes, Inside Out Construction, Home Innovation Builders and New Sensation Homes have all gone bust recently.

Probuild, Snowden Developments, ABG Group and Condev have been some of the other large casualties, while Metricon this year had to overcome speculation it was in trouble.

Queensland’s construction watchdog QBCC recently resorted to suspending the licences of 71 builders and sub-contractors after they failed to provide proof of their financial health.

Administrators appointed

Deloitte have been named as administrators, effective immediately.

“The recently announced sale purchase agreement between Murray & Roberts and Webuild for the acquisition of Clough, has been terminated by mutual agreement between the parties,” a statement on Clough’s website announced.

“In the absence of the sale proceeding, the board of directors of Clough have decided to place Clough and its Australian subsidiaries into voluntary administration in order to conduct a restructure of the business.”

“While responsibility for the management of Clough has now passed to the appointed Administrators, they will no doubt rely heavily on assistance from the Board and Management in exploring options for the restructure and recapitalisation of the company.

“The process also provides for the possibility of compromise with creditors, through adoption of a Deed of Company Arrangement, a binding arrangement between the company and its creditors governing how the company's affairs will be dealt with.”

Media reports have said the Perth-based company borrowed $167 million from WeBuild and that they were also were set to receive a $30 million loan.

The company posted a $375.3 million loss and a $304 million working capital deficit in the last financial year.

Clough’s future unravels its past

The Clough Group had placed enormous hopes in its role constructing the Snowy Hydro Project but instead incurred a $2 billion blowout.

Projects in Western Australia that are impacted include a $165 million roadworks project on the Mitchell Freeway near Osborne Park, just north of Perth’s CBD, and a $4.5 billion Urea project in Karratha.

One of the oldest engineering firms in the country, Clough was founded by John Clough in Perth in 1919 as a building company developing schools, and residential and commercial properties in Perth.

The Narrows Bridge, which links Perth’s north and south over the Swan River, was one of their most iconic projects, completed in 1959.

By 1970, the company had expanded to the east coast of Australia and into Indonesia.

Murray & Roberts took control of the company in a buyout worth $435 million in 2004.