How the fortunes changed for trucking company
In the 1930s Wally McAleese started a company with trucks parked outside his River St home that eventually became an ASX-listed logistics company worth $635.2 million - so how did it end up in voluntary administration less than three years later?
When former Mackay based transport firm McAleese Limited listed on the Australian Securities Exchange barely three years ago - bragging of growth rates of nearly 15% - it looked like a local feel good story had just got even better.
More than 85 years after Wally McAleese started the company, using trucks he parked outside his River St home, the company's opening share price was $1.57 and the company was valued at $635.2million.
But on August 29, with a share costing less than two cents, McAleese went into voluntary administration. On December 15 creditors will meet again to decide the future of what was a main player in the logistics industry.
It takes a series of blows to knock over a company of this size, and one of the biggest came just a month before it listed.
On October 1, 2013, a Cootes Transport tanker, part of McAleese's Oil & Gas division, crashed and exploded into a fireball, colliding with at least four cars.
Two men died and at least five people were injured.
The crash slammed McAleese with legal costs and the New South Wales Roads and Maritime Services came down hard on the company, carrying out an inspection of Cootes' entire fleet.
The company's 2013 prospectus stated the inspection found maintenance defects in 82% of its fleet and Cootes dragged its entire fleet off the road to be repaired and inspected independently.
The next month the state body began further inspections of a third of the fleet, identifying more defects.
Cootes restructured but soon lost tenders for BP and Shell contracts and scrapped its deal with 7 Eleven service stations because it wasn't profitable enough.
The Heavy Haulage & Lifting division was still trucking along in Mackay and the Bowen Basin, with Mackay man Keith Price at the helm. Price, with Gilberto Maggiolo, acquired McAleese Transport in 1988.
They turned McAleese into a national company by acquiring transport and crane hire companies from 1991 through to 2011.
In October 2011, former managing director of Asciano Limited Mark Rowsthorn joined the board after buying a substantial interest in the business.
He became chairman with the goal of diversifying the business into a "a range of transport and logistics markets", as stated in the company's 2013 prospectus to potential shareholders.
Mr Rowsthorn diversified away from the heavy haulage and cranes that Mr Price had focused on and ventured into other businesses.
In particular, the acquisition of International Energy Services in 2012, (the parent company of Cootes), the prospectus read.
After the Cootes crash, McAleese hit the stock market with a share price of $1.57 on November 28 and by March 10 the share price was 50 cents.
The share price continued to slide, sitting in the mid-40 cents a share range throughout 2014 as the Oil & Gas arm lost $4.2million in earnings before interest and tax.
In the same year, the Heavy Haulage & Lifting arm, which has a depot in Mackay, made $27.8million EBIT, down from $54.9million from the year before.
By April 2015 an investor would get change from a 20 cent coin when buying a McAleese share and by the end of the 2015 financial year, McAleese had a net debt of $170.5million.
McAleese Limited share price chart on Australian Securities Limited
The company's financial report blamed its woes on the drop in commodity prices for impacting its Bulk Haulage and Heavy Haulage & Lifting divisions and Cootes Transport's failure to secure Caltex Victoria and New South Wales contracts.
Six months later and McAleese's net debt had grown again to $188million and in January 2016 the company received a waiver from its financiers for failing to meet its obligations.
By June 7, 2016, Hong Kong financiers SC Lowry had had enough and led a group of creditors to enter a binding agreement to recapitalise the company.
But a group of McAleese shareholders, including Mr Price, weren't happy with the agreement.
On June 27, the group, with at least 5% of the shareholders' votes, released a statement that it "(did) not believe either of these proposed transactions (were) in the best interest of the company and its shareholders".
The group requested a meeting and wanted to propose seven resolutions.
One was to remove Mr Rowsthorn as a director and another to appoint Mr Price as a director.
A meeting was set for August 29 and on that day, before shareholders voted on the splinter group's proposal, the company was placed into voluntary administration.
McAleese Group has gone into voluntary administration https://t.co/491W7Sak1Q— Daily Mercury (@daily_mercury) August 29, 2016
Since then hundreds of prime movers have gone to auction without a reserve, depots closed down around the country and staff have been made redundant.
Mr Price has been appointed to the McAleese board with Maurice Gregory Smith but they have no power until the company emerges from administration. Mr Rowsthorn and Donald Telford have resigned from the board.
Western Australian logistics company Centurion has purchased McAleese's Heavy Haulage & Lifting division and placed Mr Price back in charge of the company he acquired in 1988.
But before that goes ahead, it has to be approved at the second creditors' meeting this month.
The creditors' proposal is for McAleese to continue to operate every arm of its businesses except its Heavy Haulage & Lifting division; however, the proposal includes keeping the Emerald, Rockhampton and Newcastle depots.
In a notice to McAleese employees this week, the administrators told employees if they worked at any site in all other divisions then they would continue to do so if the proposal was agreed to.
As for the Mackay depot, if the proposal is agreed the company would land back in the hands of Mr Price through Centurion.