Ann: Appointment of Voluntary Administrators, page-2

From The West today;

https://thewest.com.au/business/min...y-hill-to-settle-contract-dispute--c-10966160
Aerison Group administrators want Roy Hill to settle contract dispute

Danielle Le Messurier
Wed, 14 June 2023 3:28PM

Failed engineering and construction provider Aerison Group plans to continue its fight with Gina Rinehart’s Roy Hill, with administrators calling for the Pilbara miner to settle the bill at the centre of a contract dispute.

KordaMentha administrators said there was “solid” interest in Aerison, which collapsed last week claiming it was owed $47.5 million by Roy Hill, but warned delays to resolve the contract dispute would hurt key stakeholders ahead of a first creditors’ meeting on Thursday.

“We are in the process of writing to Roy Hill to appeal to them to negotiate in good faith to help save the jobs of more than 250 people,” KordaMentha partner Richard Tucker told The West Australian.
“This company can be restructured and be out of administration much more quickly if Roy Hill does the right thing. If not, the process will take longer and the outcome will be less favourable for stakeholders, who are all primarily West Australian businesses that are already facing challenges in this high inflationary market.”

A Roy Hill spokesman referred The West Australian to the company’s original statement on the contract issue noting its relationship with Aerison had included “many years of successful service delivery and project outcomes”, and that the miner was a long-standing supporter of WA businesses.
It is understood Roy Hill is considering calling in a $10m bond built within its contract to ensure the work is completed, which would take Aerison’s debt to around $57.5m.

The extent of Aerison’s problems appear to be bigger than Roy Hill. The troubled construction group was forced to reveal it took a financial hit from a February 2019 contract with BHP’s Nickel West when recently questioned by the ASX on why it did not flag significant changes to contracts earlier than February 28 when it released its preliminary annual results. Aerison suffered a net loss of $10.7m in the full-year to December 2022.

The Roy Hill contract dispute relates to the construction of a saline water reverse osmosis desalination plant, which triggered a liquidity crunch and has been blamed as a key reason for the collapse along with rising costs and supply chain problems.

It is understood part of Aerison’s claim also relates to changes to the scope of the work by Roy Hill after the contract was signed in October 2021.
The desalination plant, which has experienced issues with leaking during testing, and is a key piece of infrastructure for Roy Hill, was due to be completed by the end of last year.


Leakage in the water desalination plant at Roy Hill, being constructed by Aerison Group.Credit: Unknown/Supplied

The administrators said more than 25 expressions of interest in Aerison had been registered since they announced last Tuesday they were launching a sale or recapitalisation process.
The majority are believed to be trade players, with some eager to buy the business as a whole — the preferred outcome of the administrators — and others wanting to siphon off assets.

“In this environment where there are such material labour shortages . . . (Aerison) provides a plug and play opportunity for someone to have or increase scale in the sector,” Mr Tucker said.

Aerison was thrown a $3m lifeline from Avior Consulting, which is loaning the funds to the administrators to allow the business to continue to trade during the process.

The administration process is not believed to be impacting Aerison’s clients but many have said they are keeping a watching brief on the situation.
Long-term clients include Rio Tinto, BHP, Iluka and Fortescue Metals Group.
Aerison also provides services to several others including Chevron, Northern Star Resources and Covalent Lithium.


More on that $3m lifeline from Avior Consulting  published in  the West last week;

Spoiler : Here

https://thewest.com.au/business/her...ard-bargain-when-rba-comes-to-town-c-10931229
Fri, 9 June 2023 5:55PM …
….Avoir takes flight with Aerison

Corporate undertaker Dermott McVeigh’s emergence as a fund manager has taken a big leap forward with a multi million-dollar deal to keep failed contractor Aerison alive while administrators explore a sale or recapitalisation.

The Bull understands a new credit fund set up by McVeigh’s Avior Consulting will lend up to $3 million to the administrators from KordaMentha appointed earlier this week, averting a potential closure of Aerison as early as late Friday.
Avior is keeping details close to its chest, but this sort of lending is very profitable as it comes with a hefty interest rate that reflects the risks involved.

The financial lifeline came hot on the heels of new details of KordaMentha’s appointment to Aerison, which was brought undone by a contract dispute with the deep-pocketed Gina Rinehart’s Roy Hill iron ore mine in the Pilbara.

Word is veteran KPMG insolvency expert Martin Jones was advising Aerison but was gazumped on the better paying administration appointment when lawyers Clayton Utz referred the company to the KordaMentha team led by Richard Tucker.

According to the statutory declaration that lays out any previous dealings between an insolvent company and its administrators, KordaMentha held the first of two dozen meetings with Aerison or its creditors on May 10.
The following day it was engaged to assess the company’s financial position and develop “contingency plans”, ultimately pocketing $60,000 in fees for the work.
The last meeting is listed as June 2 - four days before its directors put Aerison into administration.