The company managing the voluntary administration of engineering giant RCR Tomlinson have – for the first time – openly pointed the finger at “unprofitable solar contracts” as central to the cash-flow issues that have brought the multi-billion dollar company undone.
As we have reported, RCR – a leading solar contractor with some $2 billion in annual revenues – was placed in voluntary administration last week after the company failed to attract more finance to get over its short-term funding issues, just a few months after it had raised $100 million to overcome a major cost blowout at two Queensland solar farms.
RenewEconomy understands that the most recent cash crisis was made worse by the failure to obtain milestone payments from project developers, in turn caused by delays to grid connection, as well potentially undercutting itself on cost.
In an update on operations and the sales process that is underway for RCR, McGrathNicol Restructuring acknowledged its solar contracts as the likely villain.
“The Group has been challenged by unprofitable solar contracts within its renewables operations, however the balance of the business operates across industries which are seeing increasing demand for services,” said administrator and McGrathNicol partner, Jason Preston, in a statement on Thursday.
“We are aiming to have clarity over the future of the business by the end of the calendar year, with a buyer or buyers identified by then,” he said.
It seems the priority is to get a buyer for the remaining businesses, while the problems over solar contracts are sorted out, including five major projects in Queensland and the Greenough River extension that has been brought to a halt in Western Australia.
As Giles Parkinson wrote on Tuesday, solar companies directly and indirectly affected by the collapse of RCR are scrambling to understand the issues.
One company, New Energy Solar, which recently purchased Manildra solar farm was built by RCR, said it was seeking to understand the implications for “a small number of items” yet to be completed.
McGrathNicol said its priority was to prepare the business for sale and to bring certainty to employees, customers and suppliers.
“We acknowledge the assistance and hard work of RCR staff, who are working in difficult circumstances. We also acknowledge the support of customers who are continuing place orders and support the business,” the statement read.