SYDNEY (AP) - Australian engineering business Hastie Group Ltd. on Monday appointed administrators who suspended operations in Australia and the Middle East after refinancing negotiations with banks collapsed.
Voluntary administration in Australia is similar to bankruptcy protection in the United States, and can buy a company time to trade out of its financial problems.
The administrator, PPB Advisory, will control 44 companies within the group. Hastie's banks have appointed McGrathNicol to manage another 11 Hastie companies, in a bid to secure the banks' interests in the most profitable parts of the business.
McGrathNicol said those 11 companies will continue to trade as usual while they are sold.
Hastie employs 7,000 staff around the world, including 4,000 in Australia and 2,000 in the Middle East.
PBB said in a statement it was suspending Hastie's mechanical, electrical and plumbing businesses in Australia and the Middle East because they had insufficient funds to continue operating.
PBB spokesman Scott Hinton declined to comment on a report in The Sydney Morning Herald newspaper on Monday that Hastie owed an estimated $500 million to a consortium of banks. The consortium includes the Commonwealth Bank of Australia, National Australia Bank, Westpac Bank, ANZ Bank, Bank of Scotland, Ulster Bank, HSBC Australia and HSBC Middle East.
Hastie's British and Irish companies were stand-alone businesses and will be sold, PBB said.
"We believe they are businesses with liquidity headroom and will continue to trade as normal under the control of the directors," PBB said.
An administrator had also been appointed to a Hastie company in New Zealand where its businesses were expected to operate as normal, the statement said.
Hastie announced early in May that its earnings for the six months through June would be reduced to zero, following two write-downs in November. It forecast a 150 million Australian dollar ($148 million) loss was expected for the second half of the calendar year.