Fletcher Building's strong financial position could see
it run the ruler over the assets of Mainzeal, should receivers
decide to sell parts or all of the floundering construction
Mainzeal, the country's third-largest commercial construction
company, was placed in the hands of receivers on Wednesday at
the application of its bank, reportedly over a $1.8 million
non-payment on a $20 million credit facility.
Fletcher is the lead contractor of the Christchurch rebuild.
Mainzeal has a large share of the city's rebuild and the
region recently passed the milestone of having more than $1
billion in repairs completed. While analysts are picking
Mainzeal can survive and receiver PwC will manage it through
receivership as a going concern, some underperforming or
cash-generating assets could be considered for sale.
Craigs Investment Partners broker Peter McIntyre said
Fletcher was in a ''strong position to have a serious look at
Mainzeal, but won't be the sole interest''. Construction
companies could be interested in Mainzeal for its
intellectual property rights, large skilled workforce of
about 400, forward construction contracts and the synergies
available from merging construction interests.
With Christchurch work finally starting to gain real impetus,
the reporting of looming staff shortages is becoming regular.
Mr McIntyre noted that Mainzeal had several projects in the
more than $20 million range.
''Big projects take big balance sheets, and that's what
Fletcher have,'' he said.
Fletcher had a good debt-to-equity ratio. Funding costs had
reduced in the low-interest environment and institutions and
small shareholders had been supportive to the tune of more
than $500 million raised recently, he said.
Another aspect for Fletcher to consider, to achieve a
''second bite'', was its building distribution arm
PlaceMakers, which could be boosted by Mainzeal work as other
construction companies start to import their own materials.
''Fletcher will no doubt will run the ruler over the company,
as it also has the distribution of product that it can
provide as well, which could be a win-win situation,'' Mr
At a glance
Mainzeal South Island tenders
Earthquake insurance tenders:
• Springston South Soldiers
• Memorial Hall
Current projects: CDHB Boilerhouse, Cave Rock,
Barrington Mall - Stage 2 - Zone A,B,C D & E, Air Nelson
Hangar Stage 2, Christchurch Town Hall EQ Remedial Project,
Christchurch District Court, Air Force Museum - New
Technology Centre, BNZ Riccarton, STAC Boarding Houses and
CDHB AIU Hillmorton Hospital.
Source: Mainzeal website