Chinese construction joint venture in Brisbane collapse after partners dispute cost overruns

Chinese construction joint venture in Brisbane collapse after partners dispute cost overruns
Chinese construction joint venture in Brisbane collapse after partners dispute cost overruns

A joint construction company venture in Brisbane between the Chinese government-owned construction giant China Railway Construction Group's and construction company Rimfire Constructions has collapsed.

The joint venture formed by the two parties, CRCG-Rimfire Pty Ltd has been placed under voluntary administration, the Courier Mail reported last week.

Fairfax Media reported Grant Thornton has scheduled the first creditors meeting for Monday.

It was a big disappointment for the world's third largest construction company, according to a media statement by the company.

"Unfortunately, the appointment of an administrator to Rimfire Constructions (Qld) Pty Ltd being the subsidiary of our joint venture partner, Rimfire Constructions Pty Ltd in September has now had a flow-on impact on the joint venture company, CRCG-Rimfire," the company said,
 
"CRCG wishes to be a productive, long-term participant in the Australian construction industry."

Rimfire Constructions was previously led by former Lendlease head of apartment construction Adam Moore and Danny Cain. 

In a report to the creditors of Rimfire Constructions, Mr Cain said Rimfire's troubles were caused by CRCG's refusal to pay for expenses incurred by the joint venture.

The business, which was initially profitable, had cost overruns, the report said, but agreement between the two companies which indicated CRCG would reimburse the JV costs ahead of regulatory approvals was not honoured, Mr Cain said.
 
CRCG disputed the debt of $1.169 million and a CRCG spokesperson vehemently rejected the claims.

"The company is confident the voluntary administrator will get to the bottom of all transactions and that CRCG's position will be vindicated," he said.

"We now find ourselves in a situation where the directors had little choice but to place the company into voluntary administration," CRCG said.

The biggest creditors in the JV fallout were subcontractors, material suppliers and employees, the joint venture's administrator, Grant Thornton's Michael McCann, said.

The joint venture had about six building contracts for apartment projects across Brisbane by unrelated developers.

The company had worked on an apartment complex at Greenslopes and a high-rise unit block in Baxter St, Fortitude Valley.

The Beijing-based CRCG has completed projects outside China, including the Four Seasons Hotel in Kuala Lumpur, a power project in Papua New Guinea and a 240 residential village in Saudi Arabia.

One of the largest companies in China and in the world, the $28 billion CRCC, has been responsible for large projects such as the Beijing-Shanghai High-speed Railway.

Tags: 
Brisbane Construction

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