Bianco Structural Steel, part of the Bianco construction group placed into receivership nearly two weeks ago, will be closed with 50 staff made redundant, according a statement from administrator Ferrier Hodgson this morning.
The announcement comes on the same day that advertisements appeared for Bianco Construction claiming the company has more than $3 million in EBIT, “extensive stockholding” and a number of leased premises.
The sale of one of Adelaide’s largest companies comes after founder Nick Bianco put $50 million into a new factory that failed to generate returns for the company after the building’s value dropped significantly during the global financial crisis.
Bianco now owes $60 million.
Ferrier Hodgson partner David Kidman said this morning the Bianco Structural Steel division was deemed unviable and will have to close.
“This business has lost more than $16 million since moving into these new premises in 2007 and was a significant contributing factor to Bianco’s current financial problems,” Kidman said.
“Since our appointment it has become clear that the amount of work on hand at BSS was far lower than we expected. If we don’t shut down BSS it will drag down the profitable Bianco Construction Supplies with it.”
Kidman says the firm will sell the facility and that the construction supplies business has continued to trade well.
Some other divisions of the firm – including Bianco Hire, Bianco Reinforcing and Bianco Precast – weren’t affected by the appointment of administrators.
“We have launched the sale program for Bianco Construction Supplies and there is a significant level of interest in that business,” Kidman said.
“We expect to be in a position to announce some positive news about the future of the Construction Supplies business over the next couple of months.
According to administrators the sale of the supplies business will consist of plant and equipment, more than 150 sales and support staff and leases for several properties in Newton. It estimates annual revenue at $60 million and EBIT of $3.2 million.
Bianco, a former owner of the Adelaide United football club and a prominent philanthropist, owes banks $60 million after expanding to the new premises in Gepps Cross.
“It hasn’t worked, because the times I suppose I didn’t understand enough of it and maybe I didn’t put enough time into it – it got a little bit too big,” Bianco told the AdelaideNow website.
Adelaide industry minister Tom Koutsantonis said the banks should not have lent such a high amount of money.
Bianco migrated with his family from Italy to South Australia in the 1950s and started his first business when he was 16.
He has become well-known for his generous gifts to various charities and to his staff, with many receiving lavish Christmas bonuses amounting to several months wages.
Bianco is a member of the Order of Australia for contributions to the building industry.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
