Key investor pulled funding for Mercedes Construction
An unknown investor pulled a deal to rescue Mercedes Construction just days before administrators were called in to the luxury apartment builder.
Talks over the future of Mercedes had been under way for months, according to a document filed by the company’s administrators to the corporate regulator.
That report shows the builder’s viability had hinged on a cash injection from an unnamed investor.
But the deal was pulled just days before the company called in administrators, leaving developers at glamorous projects along the coast hunting for new builders.
Mercedes’s sole director Adrian Gagiero was in talks with administrators from Bankruptcy Advisory Centre from mid-April, the report shows.
He was “concerned about the company’s future, but felt significant pressure from various shareholders and an investor”, the report said. The cash lifeline had kept the business going until funding was withdrawn in July.
Last week, a spokesman for Zorzi Builders — which shares key shareholders with Mercedes and had operated from the same office — had said they were effectively blindsided by the administration.
But a spokesman has since confirmed there had been talks to bring a new partner into Mercedes this year. A deal had been on the table as early as February. That deal was never finalised.
Zorzi was intending to lodge a bid to bring the company out of administration, the spokesman said.
“(To) date we have the full support of all the creditors and clients who have contacted us,” he said.
“We want to make sure all stakeholders are treated fairly and professionally as first priority.”
Camera IconMercedes Construction operated from Zorzi’s headquarters and built the office. Credit: Mercedes Construction/TheWest
He also reiterated that there would no impact on Zorzi Builders.
“As shareholders we have often gone above and beyond to proactively support (Mercedes) at all times to provide substantial additional support for the business, making this . . . all the more disappointing.”
Mercedes Construction worked on a series of luxury apartment developments along the coast, including Cottesloe and Trigg.
It’s understood residents moved in to the newly finished Elizabeth Residences in Cottesloe, built by Mercedes, in the first quarter of this year.
The development’s eight apartments were sold out by mid-2021, according to a Facebook page run by the agents.
The page also touted a targeted completion date of September 2022.
That delay of roughly 18 months has been a similar story for plenty of commercial builders. It’s believed the delayed completion added to the pressure on Mercedes.
Developers behind 331 West Coast Drive in Trigg — Westbridge Urban — are in talks with the administrators, Zorzi Group and alternative builders to get work back online. The building is 30 per cent finished.
Work at 110 Marine Parade in Cottesloe was taken over by GreenbuiltWA.
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