Contractor WDS Limited has announced it will enter voluntary administration.
It comes after the company was blindsided late last week, receiving news that Eagle Downs Coal has cashed an insurance bond worth $14.2 million, creating a massive liability for WDS.
“This was a completely unexpected development and inconsistent with discussions that had been underway with Eagle Downs about the future of the project,” WDS said in a company statement.
Since receiving the information, WDS has worked with Eagle Downs to explore a number of different options to resolve the unexpected liability issue, including terminating the contract by mutual agreement; worked with the issuer of insurance bond to negotiate continued forebearance in relation to repayment off the $14.2 million; and looking at the potential sale of WDS or debt restructuring.
However since WDS received additional advice from its secured lender that the lender had decided against continuing to provide WDS with future drawdowns it “has diminished the confidence that the company’s obligations could be met,” WDS said.
“Coupled with the lack of viable and timely alternative funding, the board is unable to reasonably form the view that the company can remain solvent.”