Adam Strong
Strongbuild went into administration because an external consultant fed confidential – and incomplete – information about its financial affairs to client Frasers Property Australia, Strongbuild managing director Adam Strong says. The company went into administration because Frasers’ last-minute cancellation of a large residential project meant a $10.5 million lending facility the company had arranged also fell through, Mr Strong said. Sources: Australian Financial Review, Fifth Estate
However, in a stinging accusation against one of the country’s largest developers, Mr Strong also said Frasers received confidential information from the consultant Strongbuild had engaged to assess its finances.
A list of the country’s top builders is said to be eyeing off Strongbuild’s prefab building facility at Bella Vista in Sydney’s north-west after the company was forced into voluntary administration. Among the names touted are builders Hutchinson, John Holland, Watpac and Lipman. Lendlease could also be in the running as snaring the Bella Vista
facility could add to its own timber prefab facility at Eastern Creek and ensure dominance in the sector.
Xlam, which started operations of its cross-laminated timber facility at Albury in April, is not believed to be a contender. In recent times its business was split in two – an advisory business that can assist clients with solutions (whether with timber prefab or other materials) and the factory, which will take time to fully scale up.
At the time, Strongbuild was in the final stages of arranging the credit facility to see it through a quiet period. The consultant, who Mr Strong said had admitted to passing on information to Frasers, was unaware of the facility.
“We had this consultant doing the forensics, which was part of the process of raising equity and debt,” Mr Strong told The Australian Financial Review.
“Unbeknown to us, he was feeding confidential information to one of our clients, Frasers. The consultant under duty of care and confidentiality was feeding information to Frasers.”
Mr Strong declined to name the consultant or detail the information he said was passed on. A Frasers spokeswoman declined to comment.
Mr Strong said he believed Frasers terminated the $40 million second stage of its Edmondson Park project on the basis of the information it received from the client.
After Frasers terminated the contract, Strongbuild showed Frasers proof of the funding facility but the developer would not rescind the termination, he said.
“We tried to convince Frasers over Monday and Tuesday this week to reconsider,” Mr Strong said on Friday. “But they wouldn’t. We had a facility approved and I showed proof of that to Frasers. But still their position was ‘We’re terminating for convenience’.
“On Tuesday night we had to advise the funder that Fraser had terminated the contract. On Wednesday morning, the funder advised us in writing they had to pull the funding.”
Mr Strong said the consultant had owned up to passing on confidential information, but Frasers had denied receiving any such information about Strongbuild.
Mr Strong said Strongbuild had issued legal letters to the consultant and Frasers before the company went into administration on Thursday, but since he was no longer in control of the company, he could not do more.
“At the moment, all we can do is reserve our rights to make a claim,” he said.
Administrator Brian Silvia said he could not comment.
“I’m aware there were developments in the lead-up to our appointment in relation to Frasers, but it’s not appropriate for me to comment on those things at this stage,” Mr Silvia said.
Frasers’ decision to cancel the 70% sold project in south west Sydney of 104 townhouses, two weeks ahead of the scheduled start “blindsided” the builder, which had a revenue of $160 million last year, Mr Strong said.
The $40 million project for Frasers included about $10 million worth of prefabricated product, he said. Family-owned Strongbuild was the builder two years ago of Australia’s largest wooden building project – a 101 unit housing project in south-western Sydney’s Campbelltown. The company employed 150 staff in three divisions.
