Ann: Decmil NZ Business Unit to Close, page-7

Moelis does a fair bit of restructuring work which is probably the focus here.

Selling a construction business is not easy to begin with given the long-term nature of contracts, receivables etc. It is also one of those businesses where doubts on viability tend to become self full-filling prophecies, because no one wants to be left with a half finished project because the construction company went under. So the base rate is not great. And the current backdrop does not help either.

Add on top that there are real concerns on the order book. Any potential buyer will wonder if there are other problems. Tough to diligence and get comfortable with. Moreover if you look at the disclosures, management has a track record of being not fully honest and transparent. Finally, I doubt that any buyer will want to keep Scott Criddle on given the value destruction he has overseen. I would imagine this to be an emotional issue for him and he may try to resist as long as he can; admitting failure is not easy.

I used to own this and sold recently. I thought they had a lot of things going for them, no debt (at the time ), some excess assets, management aligned with shareholders. While this was all probably true I did not appreciate the negative value that Scott Criddle brings to the business, which unfortunately more than offsets all the other factors. I never met him, but based on what I have seen over the last 5 years it is hard to come away with any other conclusion than that he is dishonest, indifferent to shareholders and incapable.

I hope this works out for you, if it does the return will be very good, but I fear the odds are not great.