GROCON has blamed Infrastructure NSW’s handling of the Central Barangaroo project for the development giant calling in administrators for its construction business.
Friday’s announcement followed a day of speculation that the Daniel Grollo-led company was in significant trouble, with revelations that it owed more than $5 million to subcontractors at its Northumberland project in Melbourne’s Collingwood, with outstanding invoices dating back to March, and that work on the site had been halted.
However, Northumberland and its Ribbon project looking out to Darling Harbour are not part of the administration entities.
“While I have spoken before about moving Grocon away from the construction business model to new initiatives such as build-to-rent, I did not want to call in administrators,” Grollo said.
“My desire is to pay the creditors in full. I believe we will ultimately win the case against Infrastructure NSW and when we do so, the creditors will be the first in line to be compensated.”
Grocon has suffered a string of issues relating to the $2 billion Central Barangaroo development, which it was developing as part of a consortium with Aqualand and Scentre Group after being awarded the development rights at the start of 2018. Infrastructure NSW replaced the now-defunct Barangaroo Development Authority midway through last year as the responsible government agency for the precinct.
Grocon has taken the state government to the NSW Supreme Court, seeking $270 million and attempting to have the details of the out-of-court settlement between the government and Crown and Lendlease to protect sight lines from the neighbouring new casino to be made public.
Grollo said the outcome left Grocon without the views and scale it was promised.
Grocon claims the government’s decision to settle and the ongoing delays created by the fracas led to the company selling out of the project at a heavy discount. It offloaded its interest to Aqualand for $73 million. The ongoing delays to the project due to the government’s own stoush with Crown and Lendlease also created financial difficulties from Grocon.
Documents filed with ASIC by Grocon last month said its annual solvency resolutions had not been passed, which it ascribed to the Central Barangaroo issues in Sydney and COVID-19.
Last year, Grocon struck a deal with creditors over two dormant subsidies and avoided liquidation. It came after the company called in administrators for subsidiaries Grocon Constructors (Qld) Pty Ltd and Grocon Constructors (Vic) Pty Ltd over a dispute with Dexus relating to lease payments at the 480 Queen St Brisbane office tower.