Auckland City Rail Link contractor RCR Tomlinson goes into administration

The Australian engineering company set to build the Auckland City Rail Link's underground network has gone bust, but its New Zealand branch is still trading. 

Perth-based RCR Tomlinson was awarded the joint venture contract with New Zealand infrastructure consultancy firm Opus International just last month, ABC News reports.

McGrathNicol Restructuring has been appointed to navigate RCR's administration, and will be "undertaking an assessment of the business and urgently seeking funding from the RCR Group's financiers", a statement said. 

The PR firm representing McGrathNicol, Sefiani Communications Group, says the New Zealand business of RCR Tomlinson is not covered by the company navigating its financial challenges, so there "should be no impact on [the City Rail Link]". 

City Rail Link said the company's New Zealand branch is not in administration and is "still trading". Work has not stopped on the C7 rail systems - the project RCR was awarded with Opus International.

Auckland Chamber of Commerce chief executive Michael Barnett agrees the company's inability to continue with the City Rail project wouldn't cause much disruption, telling The AM Show it's "probably not as bad as it looks". 

"I don't think it should slow down the progress on the tunnel," he said. "These are attractive contracts and I think there will be international companies that will step in."

The collapse of the Australian engineering company has come as a surprise, after it raised AU$100 million from its shareholders in equity-raising in August. It later posted financial results pointing to a positive balance sheet.

"It's hard to believe that over a period of three months you've gone from audited account signed off by the board to going into administration," said Mr Barnett.

But going into administration isn't the same as going into insolvency or liquidation, Mr Barnett points out. He said it's a managed process which allows a company to sell off assets, which could include its Auckland City Rail Link portfolio.

The company confirmed that a sale process "will be commenced immediately".

"If [RCR] Tomlinson can sell off a part of their business, there might be another international company that'll provide that engineering expertise," said Mr Barnett. 

He doesn't think there will be a delay, as it's the "sort of environment where work will continue". However, he said Auckland Council will likely raise questions about why the company joined the operation if it was struggling financially. 

"What you're going to see is lawyers and losses. The shareholders never get money out of this type of environment, so the money that's been raised over the last while by shareholders will be waved goodbye," he added, referring to the millions shareholders raised in August.

Two days ago the company posted an ad to LinkedIn listing jobs for the Auckland City Rail Link project, searching for senior to graduate engineers, through to health and safety managers and quantity surveyors.

"One of the key objectives of the CRL project is to contribute to social sustainability across Auckland, targeting employment for Māori, Pasifika and youth along with others marginalised in the workforce," the ad reads.

The ad claims RCR Tomlinson has more than 3400 people supporting major projects across its "extensive network of operations in Australia, New Zealand and SE Asia".

Mr Barnett speculates that the company's financial woes trace back to write-offs of major solar contracts in Queensland worth around $50-60 million. He said the board will have "looked at this and realised they can't finance their future and had to step away from it".

Asked if a New Zealand company could step in and partner with Opus International to continue the project, Mr Barnett said it's unlikely, as most companies in New Zealand are "probably overcommitted at the moment".

He said Auckland Council will need to seek another international company that can bring resources and expertise.

The City Rail Link project is projected to be complete by 2024, but it's not clear how RCR's collapse will affect its outcome.