Metricon’s advisors eye debt deal rescue as NSW considers support
Advisors to the country’s biggest home builder Metricon have been working on a new funding package to shore up the struggling group’s balance sheet, as the NSW Premier Dominic Perrottet indicated his government would consider a bailout for the company.
Sources familiar with the discussions but subject to non-disclosure agreements said Sayers Group, led by former PwC boss and current Carlton Football Club president Luke Sayers, was in discussions with distressed debt investors about a short-term rescue package for Metricon involving convertible notes.
A convertible note works like debt, with regular interest payments, but buyers typically have the option to convert the instruments into equity at a later date. Other options such as bringing in a new equity investor were also considered by the advisers.
The sudden death of Metricon cofounder and chief executive Mario Biasin’s last week and a meeting with Victorian Treasurer Tim Pallas sparked rumours the group was in dire financial straits and was losing the support of its main banker Commonwealth Bank.
The group’s acting chief executive Peter Langfelder hit back telling a press conference last week that the business was in good shape and said it was paying all of its subcontractors on time. The CBA has declined to comment.
According to sources familiar with Metricon’s business activities, Biasin engaged Sayers Group weeks before his sudden death to consider ways to future-proof the business and to provide more headroom for the business.
As part of Sayers Group’s work, a small number of financing organisations, including special situation lenders, were briefed under non-disclosure agreements in recent weeks about a range of options to position Metricon for future growth and to ensure it has enough breathing room in case the economic outlook for the industry worsened.
Those discussions were paused following Biasin’s death.
Sources said those conversations were expected to resume after Biasin’s memorial next Thursday, which will allow Metricon’s directors and shareholders – including the Biasin family – time to consider the best course. There has also been speculation that an overseas builder or a private equity investor might be interested in taking a stake in Metricon .
The company is also expected to find some support from the NSW government, with NSW Premier Dominic Perrottet confirming he would consider a bailout if the company requested the support.
“Those discussions are underway. We haven’t had any budget discussions in relation to Metricon. Fair Trading is working very closely with the commissioner in addressing those issues. Understanding what are those challenges that we could potentially assist with. So we’re working through that.”
Metricon had over 6,000 housing starts last year. The bulk of its work is in Victoria, while it has about 300 to 500 lots currently under construction in NSW.
Perrottet said Fair Trading NSW and the state’s building commission were working together to determine the extent of the challenge facing the home builder.
“There is no doubt the construction industry has been doing it incredibly tough over these last few months, particularly with the weather that we’ve had across Sydney and regional New South Wales.
“So we’ve been engaging very closely with the construction sector, particularly those smaller construction companies who I think some of these challenges are more pressing [for]. And we’ll work through those issues, but I don’t want to preempt that because we’re trying to at the moment attain and a greater appreciation of the extent of the challenge that Metricon and others are facing.”
A spokesman for the Victorian government said it understood the impact that supply issues and cost increases were having on builders and those builders’ residential clients and it would continue to work with the industry to address those challenges.
Metricon’s chief funder, the Commonwealth Bank, has repeatedly declined to comment citing client confidentiality.
With Jackson Graham.
Support is available from Beyond Blue on 1300 22 4636, headspace on 1800 650 890, Head to Health on 1800 595 212 and Lifeline on 13 11 14.
Most Viewed in Business
Source: Thanks smh.com