buildings, Chinese supply botch fell Mainzeal over just $20M
By Pattrick Smellie
Feb 6 (BusinessDesk) - One of New Zealand's best-known commercial construction firms, Mainzeal, placed its operating
business in receivership as a combination of leaky homes suits and a botched supply chain from China combined to take
the company down.
In a dramatic afternoon on New Zealand's national day, Waitangi Day, Mainzeal Property and Construction (MPC) was placed
in the hands of receivers at the accounting firm, PwC.
At the same time, the former Prime Minister Dame Jenny Shipley, former head of Brierley Investments Paul Collins and a
Tauranga businessman, Clive Tilby, resigned from the board of Mainzeal Group, which owns MPC, which they had already
left last December.
The joint statement said all three had resigned from MPC last December at the request of Richard Yan, the ultimate
shareholder in Mainzeal and a celebrated Auckland business leader who came to New Zealand from China in 1981 for
tertiary education and stayed while building business links back to China.
Yan is chairman of the Richina group of companies based in Auckland and Shanghai, and spoke at the launch of the
government's China trade strategy in Auckland last year.
BusinessDesk understands the receivership is over the failure to make a $1.8 million payment on an outstanding $20
million credit facility, and that this was the last straw in a string of difficulties the company had faced in recent
years.
MPC had been emerging from the aftermath of a multi-million leaky building suit involving Hobson Towers, a two-tower,
97-unit block in Hobson St, Auckland.
More recently, it's understood MPC had been caught in supply chain difficulties involving the New Zealand arm of the
King Façade Decoration Engineering Co, a Shenzhen-based company supplying product to the New Zealand market.
Yan's company, Richina, was in a joint venture with King Façade to supply Mainzeal with product, according to King
Façade's New Zealand website.
Mainzeal is a well-known New Zealand construction company, and a major player in the Christchurch post-quake rebuild.
In a statement, receivers PwC said Yan had advised them that MPC had suffered "a series of events that adversely
affected the company's position, coupled with a general decline in commercial construction activity."
Shipley, Collins and Tilby said in a statement that MPC had been "meeting its obligations as they fell due and had
facilities with its bankers that enabled it to continue to operate."
"We agreed to accept the role of directors Mainzeal Group Ltd based on the undertakings and assurances given by the
shareholder (Yan) at the time. Sadly, these have now changed, which have led to our resignations."
The company had been "working towards a positive cashflow and profitability in 2013."
Insurance group Vero, which uses Mainzeal as a major partner in the commercial reconstruction of Christchurch, said it
had "not been using Mainzeal for any domestic projects."
"They have been involved in a small number of our commercial reinstatements. We will continue to work closely with our
customers to ensure their progress is not impacted.
"This will not affect the overall recovery in Christchurch, the company said in a statement.
Mainzeal's website shows it had been reacting to the lack of demand for commercial construction by moving into
construction of affordable housing projects, which has emerged as a key political issue in 2013.
(BusinessDesk)