20th May 2009

EMBATTLED construction giant CMC Cairns has gone into voluntary administration, wilting under debts of $13 million owed to subcontractors, suppliers and creditors.

Yesterday, CMC directors Peter Watson and Wolf Odenthal issued a joint statement that said the best course of action "to see people paid" was to place the company in administration while working on a rescue plan.

The directors said CMC expected to be able to pay contractors a "substantial percentage" of what was owed within nine months, while paying the remainder of money over the next few years.

But this is dependent on whether the Building Services Authority allows trading to continue. The company has stopped work on 11 building sites in Cairns and Townsville.

"The administrator, SV Partners director Terry van der Velde, said there are details to sort out but a request may be made to BSA shortly for permission to continue trading," the statement said.

"The directors are striving to resume work on site this week.

"Within the next weeks, CMC will have an expert report finalised and a Deed of Company Arrangement prepared to set the way forward."

Mr Watson and Mr Odenthal last week said they were preparing a rescue plan that needed more than 200 creditors to sign off on to continue.

Yesterday, BSA general manger Ian Jennings said the BSA supported the decision to
resolve the company’s solvency issues and said any request to continue trading by CMC would be considered.

But a BSA statement issued hours earlier said CMC Cairns had circulated incorrect and misleading information.

Mr Jennings said subcontractors, suppliers and industry associations had reported that representatives of CMC Cairns had told them the BSA had agreed to allow the company to continue to trade under administration to allow a Deed of Company Arrangement to be put in place.

He said the BSA had issues with the turnaround proposal and said the proposal appeared to benefit the directors more than the creditors.

Mr Jennings said he was concerned that plans to move debts of all those owed money by CMC Cairns to a creditors’ trust was an attempt by the directors to prevent creditors from having recourse against the company should its plan not work.

John Reynolds, the owner of Smithfield Electrics, owed more than $200,000 for work on Edge and Botanical apartments, said he was happy there appeared to be progress with yesterday’s decision but said it remained dependent on BSA approval.

"If the job starts up again and we end up getting paid up, I will be happy," he said.