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1300 Forge Group workers lose jobs

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1300 Forge Group workers lose jobs

The Forge Group collapse has left 1300 people out of work as administrators confirm there is no money to pay employees.

The move comes just 24 hours after the Forge collapse, with receivers KordaMentha and administrators Ferrier Hodgson taking steps to remove almost the entire company’s workforce as Forge’s clients abolished its contracts.

KordaMentha partner Mark Mentha said it would assist workers apply for entitlements.

"There is no money to pay employees and no work to perform," Mentha said.

"We are working closely with the administrators Ferrier Hodgson to do whatever we can to help the employees at this dreadful time for them and their families.

"We will be bringing the employees back to their home town and helping them apply for their entitlements."

He said workers would receive their entitlements from the sale of Forge assets and the federal government scheme that guaranteed basic entitlements.

The company’s offshore operations in the US, South Africa and Asia will be maintained until their sale with Mentha stating he and his colleagues "would move quickly to assess the viability of Forge's Australian business on a project-by-project basis".

Among these projects is the $830 million contract it was awarded in September to supply engineering, procurement and construction services at Gina Rinehart’s Roy Hill mine.

A spokesman for Roy Hill said it was too early to speculate what impact the collapse would have on the $7 billion iron ore mine.

Forge Group confirmed it would go into administration this week after ANZ withdrew its financial support for the company after months of project blowouts and massive writedowns.

The future of the Perth-based contractor has been unstable since November when it revealed profits were well below guidance this financial year, revealing a $127 million write down which it attributed to two power station projects.

At the time the company said an internal review had "identified concerns in relation to the underperformance" in relation to its $420 million Diamantina contract in Queensland and its $150 million contract with Rio Tinto at the West Angelas iron ore mine in Western Australia. 

While last-month the company flagged losses for 2014 to total $25 million before one-offs and writedowns.

ANZ was prepared to extend extra credit to Forge, but the developments in recent weeks forced the financier to reassess.


 

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