Barangaroo battle puts pressure on Grocon
Melbourne builder and developer Grocon has cited the coronavirus crisis and a legal dispute with the NSW government over the multi-billion-dollar central Barangaroo precinct as pushing its operations to the limit.
The company, and a series of its subsidiaries connected to the Barangaroo project on Sydney Harbour, have made filings with the corporate regulator, saying that annual solvency resolutions had not been passed.
The resolutions attest to an entity’s solvency for the next 12 months and some rival construction companies are expected to go down a similar path due to economic pressures.
Grocon has complained that it has been pushed to the brink over its treatment by state body Infrastructure NSW, the successor of the Barangaroo Development Authority.
While it is continuing build-to-rent projects separately, Grocon says its dealings have left it in a precarious position after a court case found that views from developments by James Packer’s Crown Resorts and development giant Lendlease were protected in a broad vista from the Sydney Harbour Bridge to the forecourt of the Sydney Opera House.
This crimped Grocon’s highrise ambitions for Central Barangaroo and it has launched a $270m legal action against the NSW government, claiming that it was mistreated and then forced to sell out at a deep discount to Chinese backed Aqualand.
A company spokesman said due to “challenges faced by the construction industry during the COVID-19 pandemic, and Grocon’s ongoing legal action in the NSW Supreme Court seeking compensation for the financial losses the company experienced as a result of major delays in Central Barangaroo project, company directors have chosen the option of filing a Form 485 with ASIC at this time”.
The Melbourne developer was last month slugged with a $1m costs order as it began the legal fight against the NSW government development agency. Grocon had warned it may be unable to continue the case if hit with a hefty costs order. However, the case is continuing.
Barangaroo was once billed as a $5bn opportunity to build a harbourside precinct, but Grocon says it was left in a dire financial position by the actions of the BDA.
All up, the Daniel Grollo owned company is seeking close to $270m after being cut out of a secret settlement made between the BDA and James Packer’s Crown Resorts and the listed developer Lendlease, which protected views from their multibillion towers in the neighbouring Barangaroo South precinct.
It claimed this restricted development at the central precinct to low-rise towers, and delays in issuing a crucial sight line certificate also derailed a major deal to sell an office tower to Canadian investor Oxford Properties Group.
Grocon is making claims against Infrastructure NSW for misleading and deceptive conduct, estoppel and breaches of contract, and seeks damages and equitable compensation of up to $269.7m.