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Former directors 'well aware' of Mainzeal's financial position

Published: 6:03AM Friday February 08, 2013 Source: ONE News

The former independent directors of Mainzeal Construction and Property say they have been well aware of the company's financial position over the past year.

The three directors, Dame Jenny Shipley, Paul Collins, and Clive Tilby released a statement today which said management, including the Independent Directors and the Director and shareholder Richard Yan, worked hard on particular business challenges.

"With the support of our bankers had arrangements in place and equity support from our shareholder up until late January of this year.

"Furthermore we had a three year business plan, banking arrangements in place, negotiations were going on with the shareholder and commitments were being made by the shareholder regarding future support for the company which would see it return to a cash flow positive position and profitability in 2013," the statement said.

The directors added that unexpectedly as of the end of January this year, the written undertakings and assurances that the company, the independent directors, and the bank had relied on, changed.

"This led to the bank withdrawing support and despite exhaustive efforts by many people, a binding commercial solution was not able to be achieved," they stated. "At that point the independent directors felt they had no choice but to resign."
Yan put the company into receivership citing difficult trading conditions and the withdrawal of shareholder support from Richina Pacific as the explanation.
"The Independent Directors remain deeply saddened that this has occurred and will assist in anyway required in the official process now underway," the statement said.

Anxious wait
Meanwhile, the anxious wait for staff and independent contractors of Mainzeal Construction and Property looks set to continue and they are unlikely to hear anything from receivers until at least some time next week.

The collapse has left hundreds of workers unsure about their future and several multi-million dollar projects in limbo.

It is feared some subcontractors will go out of business, while organisations relying on Mainzeal construction work say the news is disastrous.

With the country's third largest construction company in receivership, contractors have been left out of work and building sites around the country are deserted.

In Kapiti, north of Wellington, the community has been waiting on a $21 million aquatic centre that is just weeks from being finished.

But the council's chief executive says they may now have to finish the centre themselves.

"We're so close to being finished, it was going to be opened at the end of March by the Governor General...huge excitement in the community and it feels like it's been snatched away from us," Pat Dougherty said.

Further north, another huge project is in limbo after the receivership halted work at leaky Auckland city apartments built by Mainzeal which had subsequently been carrying out repairs.

But the situation is better for workers in Christchurch where the Earthquake Recovery Authority says there is plenty of work.

"Everybody's got big work books, big order books that are full at the moment," chief executive Roger Sutton said.

And Prime Minister John Key said he expects Mainzeal workers to find jobs in other places.

"We know in places like Christchurch, and increasingly in Auckland, there is a shortage of skilled workers," said Key.

But the opposition is now putting pressure on the Government for answers.

Labour leader David Shearer says the Government needs to be asking Mainzeal what is going on.

"What's the state of play with all the Government projects that we have been funding through the taxpayer and make sure that they are completed and finished," said Shearer.

With receivers working through more than 50 sites on a case by case basis, the answers won't be coming soon.