- BRW Lists
Published 26 February 2013 11:14, Updated 27 February 2013 23:45
Max Beck’s signature development was the $600 million 333 Collins Street project in Melbourne. Photo: Luis Ascui
Iconic Melbourne property developer Becton has been placed in receivership after key lending group Goldman Sachs-Fortress Investment Group lost patience with the troubled group.
Becton was founded by Rich 200 member Max Beck, who retired in 2007 but remains a shareholder in the group.
He told BRW this morning it was disappointing to see the company go under.
“I think everyone had seen it coming but it’s a sad day for the company and all the employees and shareholders.”
Beck said in a further statement that for more than 30 years, “Becton had created a fantastic reputation for the highest quality development and I cannot understand what has happened to the company since I ceased to be involved with it”.
“I cannot comment on why Becton has fallen into administration, all I can tell you is that when I ended my role with the company I believed it still had a very strong future, with good projects and a dedicated team.
All I can tell you is that when I ended my role with the company I believed it still had a very strong future, with good projects and a dedicated team.
“My thoughts are with all the wonderful people and [the] chairman that work for Becton today and contributed so much to the company in the past.
“It’s just so tragic that a company that took 30 years to build has been allowed, by others, to collapse in just a few short years.
The collapse won’t have too great an impact on Beck from a financial point of view as his Becton shares comprise just $55,000 of his $375 million fortune as valued on the 2012 BRW Rich 200.
In a statement, Becton said that “protracted” discussions with Goldman Sachs-Fortress Investment Group (GSFIG) had failed to secure the lender’s support for chief executive Matthew Chun’s restructuring strategy.
“The board and management submitted detailed restructuring proposals to GSFIG but has been advised that GSFIG is not prepared to support these restructuring proposals.
“Despite extensive negotiations with GSFIG, the board has been unable to reach agreement with GSFIG on the merits of the proposals.”
Receivers from KordaMentha have been quick to stress that the receivership is “limited” at thist stage.
“It is important to understand this is a very limited receivership, which affects the ownership and control of Becton but not the business operations,” administrator Mark Korda told the Australian Financial Review.
“It will be business as usual in the development, construction and retirement operations.”
GSFIG bought a debt exposure to Becton at a discount just after Christmas from beleaguered British lender BOS International.
It has been effectively competing with major investment groups including Mariner, Telopea and Titanium, who have bought in to the business in recent months.
But last Friday Telopea removed its director, Andrew Kerr, from the board, with principal Craig Carracher telling The Australian Financial Review he had lost confidence that there was an opportunity to turn around the company and grow it.
The company still holds a number of lucrative projects, including a $665 million urban regeneration project at Bonnyrigg in Sydney’s west; a $414 million mixed-use project in Sydney’s inner suburb of Waterloo, and a retirement business jointly held with an Omani fund. Receivers will now seek to sell these assets.
Max Beck founded Becton in 1976, and built the Melbourne developer into a national player. It was most famous for the $600 million 333 Collins development in Melbourne’s CBD.
By the time Beck retired in 2007, the company had completed in excess of $5 billion in construction and development projects and had strategically diversified into student accommodation, resort style retirement living, coastal development, and property funds management with over $3 billion under management.
But the global financial crisis put enormous strain on the highly geared business. While Chun appeared to be turning the company around, the impasse between the debt and equity holders appears to have sealed its fate.