Wilkins, Davies in receivership

Press, 2 December 1989, Page 11

Wilkins, Davies in receivership

By

TOM METCALFE

The contractor and part-owner of the Price 'Waterhouse building in Armagh Street in Christchurch, Wilkins and Davies, has gone into receivership because it promised to pay the Development Finance Corporation’s losses on the building.

The Auckland-based construction company announced its receivership to the Stock Exchange yesterday, one day after the building was put up for auction by the first mortgagee, NZI Bank. The building will be auctioned on December 19, and is expected to sell for between $35 and $4O million, just enough to cover the NZI Bank mortgage of about $37 million.

The DFC is the second mortgagee, and stands to lose about $l4 million at that price. However, Wilkins and Davies has guaranteed the DFC mortgage, and under that guarantee would be liable for such a loss.

In a statement yesterday, Wilkins and Davies said the receivership

followed the failure of the DFC to release the company from the guarantee.

The company’s debenture holders and DFC had failed to reach an agreement on the guarantee, and now the debenture holders had withdrawn their support for the financial restructuring of the company.

The guarantee had been the last obstacle in the restructuring, the statement said. The statement did not name the debenture holders, but the Bank of New Zealand and NZI Bank have been involved in the restructuring. The Press Association reports that Wilkins and Davies’ chairman, Mr Des Malaga, told the company’s annual meeting last month that the guarantee agreement with the DFC was then subject to “final documentation.”

The guarantee was for up to $32 million, and the deal required the DFC to put more money into the Price Waterhouse development. Statutory managers were later appointed to the DFC who refused

to accept the deal, he said. Wilkins and Davies reported a $28.4 million loss for the year ended March 31, after a $7.8 million profit in the previous year. Mr Mataga would not speak to “The Press” last evening. It is expected that the company will continue to build the Price Waterhouse building under the supervision of its receivers. The building, Christchurch’s tallest, is due to be finished this month.

The Wilkins and Davies receivership is the latest in a string of problems associated with the project.

The original developer, Advantage Corporation, was put into receivership by the DFC last year, along with its parent company, Mainstay Properties. Ownership was transferred to a joint venture company between Advantage and Wilkins and Davies, called One One Nine. One One Nine was put into receivership in October by NZI Bank after the appointment of statutory managers to the DFC.