Grocon administrators look at future of its building arms
The Grocon construction business is now in the hands of administrators KordaMentha after a week of backroom talks about the future of the business.
Grocon‘s Daniel Grollo had flagged it would call in administrators and now, Andrew Knight, Craig Shepard and Mark Korda of KordaMentha Restructuring have been appointed.
They will take control of 39 Grocon Group companies, which have been dubbed the legacy elements of the prominent construction, development and property group.
The companies owe creditors about $60 million.
A first meeting of creditors would be held on 9 December and a second meeting could be held later in the month, although much will hinge on the NSW court case that will not be heard until next year. This week Lendlease intervened in the case, seeking to ensure its dealings were kept confidential.
Mr Knight said the administrators were appointed to these entities but not the companies associated with Grocon’s current ongoing projects, including a stalled project in Melbourne’s Collingwood and Sydney’s The Ribbon development.
“We understand that these projects will continue while the future of the Grocon Group is decided. The Grocon companies involved in litigation with the NSW Government are also not in administration and remain in the control of Daniel Grollo,” Mr Knight said.
Those companies are suing the NSW government agency Infrastructure NSW for $270 million over what Grollo claims is “unconscionable conduct” by the body over its treatment at the Central Barangaroo development.
While Grocon is a diminished force after pulling back from building projects, the Grollo family is synonymous with the construction sector in Melbourne, erecting such buildings such as the Rialto Tower, Crown casino complex and dozens of others.
Daniel Grollo is the third generation of the family and took on the riskier elements of the business started by his grandfather Luigi, who arrived in Australia from Italy in 1928 before starting his own concreting business in the 1940s with a small team of workers and one truck.
Grocon went on to become one of the largest and most successful construction groups over the next 50 years under the control of Luigi’s sons Bruno and his brother Rino, before they divided their interests.
Bruno Grollo retired in 1999, leaving son Daniel at the helm of Grocon. In a later split Daniel Grollo took control of the development and construction business, with his siblings handling properties.
In a nod to the complexity of the business, with subcontractors claiming to be owed millions on the Melbourne project, Mr Grollo said the priority was to “assess the business and begin to work towards finding the best outcome for all stakeholders”.
Mr Knight said the first meeting of creditors would be held on 9 December. The future of Grocon would be decided at the second meeting of creditors, which is likely to be held mid to late December.
The beleaguered developer is facing an increasingly complex path to paying back creditors after saying much hinges on the success in its legal action in NSW.
Grocon has been in court for months against state development authority Infrastructure NSW. This week global giant Lendlease intervened in the legal case, seeking to ensure its dealings with the body were kept confidential.
The legal skirmish in the NSW Supreme Court is part of Grocon’s long-running dispute with the government agency after the body settled a dispute with Lendlease and James Packer‘s Crown Resorts in August 2019.
The deal – the terms of which remain secret – protected the pair’s sightlines in a broad vista stretching from the Sydney Harbour Bridge to the Sydney Opera House, from their luxury towers in Barangaroo South.
That agreement scuttled Grocon’s plans for a tall skyscraper at neighbouring Central Barangaroo. It claimed it was later forced to sell out at a discount to Chinese backer Aqualand.
Grocon also claims to have missed out on a windfall from onselling a proposed office tower to Canada’s Oxford Properties Group due to the development agency’s actions.
However, some property players have questioned whether the deal would have been completed as it was also subject to approval by Aqualand and retail partner the Scentre Group.
The legal battle is the one of the last major hopes for Grocon, which has been rocked by a dispute on a stalled site in the Melbourne suburb of Collingwood.
The company is loggerheads with developer Impact Investment Group and subcontractors owed up to $8 million. It also claims to not have been paid since May, although Impact disputes this.
In Sydney, Chinese-backed Greaton has been undertaking an extended review of how it will complete the $730 million The Ribbon project in Darling Harbour, which Grocon has been building.
– With John Stensholt
This article originally appeared on www.theaustralian.com.au/property.