More gloom in Australia - updated

More jobs gloom as engineering firm collapses

MORE than 2000 jobs will be axed after embattled engineering company Hastie collapsed under an estimated $500 million of debt

the Age,

28 May, 2012

In a major blow to the Gillard government, most of the job losses will come in the economically troubled states of New South Wales and Victoria.

BusinessDay believes up to 1300 Hastie Group staff in the two states will be told today they no longer have work.

The south-eastern states have borne the brunt of recent job losses in Australia, with Qantas last week axing 500 engineering jobs from its heavy maintenance division, the majority at Tullamarine. News Limited is also days away from announcing major job cuts as it restructures its largely print-based publishing business, with up to 400 editorial jobs set to go, while Caltex has flagged it might shut down its two Australian oil refineries in the next year.

News of the collapse of Hastie Group - the nation's biggest provider of airconditioning and refrigeration systems for office towers, apartment blocks and hospitals - comes on the eve of a Labor caucus meeting in Canberra at which jobs will be high on the agenda.

On Friday, Hastie Group non-executive directors Lindsay Phillips and Harry Boon quit after a $20 million ''accounting irregularity'' emerged in the books of one of the company's Queensland divisions. That came as Hastie was in negotiations with its banks over a refinancing deal.

All four of Australia's major banks form part of an international syndicate that has lent $500 million to Hastie. ANZ is believed to have the biggest exposure, and is owed an estimated $150 million.

At the weekend, Hastie Group executives met advisers from corporate reconstruction specialist PPB, but last-ditchattempts to revive the recapitalisation failed. Early yesterday, the board decided to appoint PPB as administrator and McGrathNicol as receiver of the company. Both firms will be officially appointed today.

After announcing a $150 million December-half loss, Hastie Group's ASX market value plunged to just $21 million before the company was put in a trading halt on April 13 and suspended from trading four days later. That was the result of a dispute over alleged unfair payment of ''performance bonds'' to a builder in the Middle East.

The company has reported the $20 million accounting discrepancy to the Australian Securities and Investments Commission.

Hastie is a conglomeration of more than 50 business units across Australia, New Zealand and Britain. Some of its profitable units will continue to operate, as will crucial business units that provide maintenance services to hospitals and apartment blocks.

Hastie's collapse to hit banks

AUSTRALIA'S big four banks are facing write-downs totalling almost $250 million in the wake of Hastie Group's collapse into receivership at the weekend

the Age,

28 May, 2012

ANZ is the lead lender in a consortium of banks that includes Commonwealth Bank, National Australia Bank, Westpac, ANZ , Bank of Scotland, Ulster Bank, HSBC Australia and HSBC Middle East.

That syndicate is owed an estimated $500 million, according to sources close to weekend negotiations over Hastie's future.

The debt is believed to be a 50:50 split between loans and bonds.

In total, ANZ is believed to be owed $150 million. Commonwealth Bank, with $20 million, has the smallest exposure of the Australian banks. ''The other two, Westpac and NAB, fall somewhere in between,'' BusinessDay was told by a source close to the negotiations yesterday.

The corporate regulator is now assessing claims that a $20 million ''accounting irregularity'' is in the books of one of Hastie's Queensland divisions. Discovery of that $20 million black hole scuttled a refinancing deal with the banks.

''We've sent the matter to ASIC,'' chief executive Bill Wild said on Friday. ''We'll go step-by-step. We're still working on it.''

In the wake of Hastie's $150 million December-half loss, and a share price that has plunged from $2.17 to just 16¢ in the past year, that accounting irregularity is worth almost as much as Hastie's entire $21 million market capitalisation

For article GO HERE

Stocks poised to extend retreat

Australian shares are poised to extend losses to a fourth day as worries about Europe continue to weigh on global markets, placing them on course for their worst month since the depth of the financial crisis

SMH,

28 May, 2012

Australian share futures were down 13 points, or 0.3 per cent, to 4018. The ASX200 closed at its lowest level in almost six months on Friday, losing 26.6 points on the day, or 0.7 per cent, to 4029.2. The All Ordinaries fell 25 points, to 0.6 per cent, to 4081.2.

Companies in focus

Local construction companies may be a focus of the market today after another firm in the industry, Hastie Group, collapsed into receivorship over the weekend.

Media companies may also examined closely by investors, with News Corp. expected to announce the loss of as many as 400 editorial jobs as the firm adjusts to weaker advertising revenue.

Qantas may also be active after Deutsche Bank speculated that rival Emirates may invest directly into the Australian carrier's domestic operations.

Deutsche Bank, meanwhile, raised its recommendation to "buy" for Mondelphous Group and Fortescue Metals.

In local economic news today, Reserve Bank governor Glenn Stevens is to address the Australian Payments Clearing Association’s 20th Anniversary Symposium in Sydney. National Australia Bank is due to release its quarterly online retail sales index.

May losses

Australian shares are down almost 9 per cent in May, the worst monthly return since markets shed more than 12 per cent in October 2008 when US investment bank Lehman Brothers collapsed.

The losses for the month so far total about $115 billion.

This week investors will keep a close eye on a raft of data being released locally and overseas, including an Irish referendum on a European fiscal pact on Thursday and US jobs numbers on Friday.

Australian retail sales figures will be released on Wednesday, with risks to the downside after a bounce in March.

On Thursday, relatively weak building approvals figures will be released after a lift last month.

The RP Data Rismark house price index will be released on Friday.

Spain pain

Another flare-up in Europe's debt crisis knocked US markets lower on Friday as Spanish bank Bankia hoped for a major bailout.

"In the absence of any more weekend stimulus announcements out of China, futures point to a softish open for the Australian share market," said AMP Capital Markets head of strategy Shane Oliver.

Despite a better consumer outlook in the US, investors were still worried about Spanish banks and the possibility of Greece leaving the eurozone.

Meanwhile, the new president of Spain's fourth-biggest bank, Bankia, was confident of receiving 23.5 billion euros ($A30.4 billion) from the government in the largest bank bailout in the country's history.

The Spanish government aid includes the 4.5 billion euros ($A5.82 billion) already tipped into Bankia after the lender was partially nationalised earlier this month.

Global markets

LONDON - The euro briefly dipped below $1.25 but European stocks firmed despite dark clouds lingering over the eurozone with concerns that problems at Spanish banks could turn into a full-blown crisis.

Trade was choppy throughout the session but took a final turn higher on news Italian Prime Minister Mario Monti had invited French, Spanish and German leaders to a four-way summit after key Greek elections in June.

At close London’s benchmark FTSE 100 index inched up 0.03 per cent to 5,351.53 points, while Frankfurt’s DAX 30 gained 0.38 per cent to 6,339.94 points and in Paris the CAC 40 rose 0.32 per cent to 3,047.94 points.

Madrid gained 0.13 per cent to 6,543 points even though lender Bankia earlier asked to be suspended from trading on reports saying the bank may seek up to 20 billion euros from the state to stay afloat.

HONG KONG - Asian markets closed mixed as weak European data added to pessimism after this week’s disappointing summit on saving Greece from leaving the eurozone.

Positive leads from Wall Street and European markets were unable to provide a thrust as Asian indexes which in the past month have given up the gains made since the start of the year.

Tokyo closed up 0.20 per cent, or 17.01 points, to 8580.39, while Seoul was 0.53 per cent, or 9.7 points, higher at 1824.17.

Hong Kong ended 0.25 per cent, or 47.01 points higher at 18,713.41 and Shanghai was down 0.74 per cent, or 17.42 points, at 2333.55.

UPDATE

Hundreds of Hastie staff stood down by SMS

German solar power plants produced a world record 22 gigawatts of electricity per hour - equal to 20 nuclear power stations at full capacity - through the midday hours on Friday and Saturday, the head of a renewable energy think tank said

the Age,

28 May, 2012

Hundreds of Victorian workers are receiving text messages this morning saying they have been stood down without pay after the embattled engineering company Hastie collapsed under an estimated $500 million debt.

Electrical Trades Union state secretary Dean Mighell said many of the 500 workers his union represents in Victoria and South Australia were on an industry-rostered day off today and were informed this morning via text message that the NSW-based company had been placed into voluntary administration.

In a further blow, the workers have been stood down without pay for 28 days, meaning they cannot access unemployment benefits or redundancy funds because technically they are still employed for that period, Mr Mighell said.

"The reality of losing their job is bad, only made worse because they can't get access to any unemployment benefits or their redundancy because the administrators said that they are technically still employed while not getting paid for 28 days," said Mr Mighell, who met the administrators this morning.

"They [Hastie] say there is a 28-day process they have to go through, and they're saying unofficially that they [his members] will be terminated after that process."

Mr Mighell said he was heading to Canberra this afternoon to discuss the situation with Workplace Relations Minister Bill Shorten.

The union will also hold a mass meeting for its members at its Arden Street headquarters in North Melbourne at 10am tomorrow.

Mr Mighell said he believed up to 3000 people were set to lose their jobs across the country, including 500 of his members across Victoria and South Australia who are employed across the Hastie Group to do plumbing, electrical work and mechanical engineering.

"It's a very dark day. It's a very dark day for jobs and a very dark day for thousands of workers in this country. Through no fault of their own they've lost their jobs," Mr Mighell said.

"They can resign and get work with other companies, but in Victoria ... there isn't much work around so the job prospects are really bad."

He said the expected job cuts came as Gina Rinehart was granted an enterprise migration agreement, enabling her company, Hancock Prospecting, to import 1715 workers to help build the $9.5 billion Roy Hill iron ore project in the Pilbara.

"Meanwhile we've got tradesmen in Victoria staring down the barrel of long-term unemployment and just can't get a start," he said.

"I'm off to Canberra this afternoon to have a chat to Bill Shorten just to see if there's not anything he can do in order to free up these workers and their employment status."

The Australian Manufacturing Workers Union has also been contacted for comment