Beechwood Had Other Problems

Sydney Morning Herald

Tuesday May 20, 2008

Colin Kruger

THE unseasonal heavy rain in NSW early this year helped to seal the fate of the failed home builder Beechwood Homes, with the project delays holding up much needed cash flow, the company's receiver, Chris Campbell, from Deloitte, says.

But details emerging from the collapse last week suggest there is much more to the story.

As a privately held company, no details of Beechwood's financial state were made public, but a picture is emerging that suggests the global credit crunch and a housing downturn in NSW were not necessarily the sole culprits.

Mr Campbell, who was appointed to recover $10 million owed to Bankwest, said he had been told of an ownership dispute at the business that resulted in litigation, and "a lot of cash spent on that". There were also investments in "other ventures which caused a further cash drain".

He would not say whether this referred to the ill-fated investment by Beechwood's founder, Larry King, in the thoroughbred syndicate Written Bloodstock.

Last year Mr King was seeking to recover $72 million from his partner, Mark Peters. They operated the venture with their wives.

Mr Peters was the subject of a bankruptcy case following the collapse of the syndicate in 2005.

There were other problems for Beechwood. They included the merger of the three geographically separate Beechwood operations into the one group. The merger did not include a rationalisation of costs, leaving the home builder with "overheads way too high for the size of its operations", Mr Campbell said.

More money was spent setting up the sale of the business, a process that was underway when administrators and receivers were appointed.

The sale process resumed over the weekend ,with the receivers advising for parties interested in buying either the whole business, or just its core assets.

Mr Campbell said 10 parties, including other home builders and property developers, had expressed interest.

This is believed to include Jim Masterton, of Masterton Homes, who has publicly announced what he described as a rescue package for Beechwood.

Interested parties will have until Friday to register their interest in the sale to Deloitte.

© 2008 Sydney Morning Herald

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