Hydroworks creditors face $12.6m shortfall, liquidators say

Powerhouse chairman Russell Yardley said in mid-July Hydroworks was on a "much better trajectory"

Unpaid creditors of Hydroworks face a $12.6 million shortfall with the liquidators of the failed hydroelectric turbine maker finding the firm had little in the way of its own intellectual property.

Interim liquidators were appointed to the Christchurch-based company in August by cornerstone shareholder Powerhouse Ventures after the board walked out. Liquidators David Webb and David Vance of Deloitte were later appointed in October and since then have been assessing the value of the business as they look to start selling assets.

"We were informed that all employees were told not to turn up to work by company management after learning of our appointment as interim liquidators the day before," the liquidators said in their first report. "Without sufficient working capital funding and facing staffing difficulties, we were left with no option but to cease trading immediately and terminated the employment of all staff."

While the liquidators went through the remaining assets to see what value was left in the business, they found Hydroworks held intellectual property belonging to its customers, which the liquidators located, extracted and returned.

"During this information review process, it also became apparent to the liquidators that the company in its own right owned very limited intellectual property available to be realised during the liquidation," Webb and Vance said.

The liquidators didn't disclose the value of any property plant or equipment, but noted the majority of assets were leased by the firm. With $381,000 owed to preferential creditors, $5.1 million to secured creditors, and another $7.6 million to unsecured creditors, the liquidators estimated a shortfall of $12.6 million.

ASX-listed Powerhouse owned 24 percent of the hydroelectric turbine designer and had been weighing up options to restore administration control to Hydroworks before seeking a court order to install interim liquidators. The company's shares last traded at 35 Australian cents, having more than halved so far this year.

(BusinessDesk)


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Another company goes under with a big loss to it's creditors, all under the eyes of the regulators. The bosses do a runner, leaving the vultures to pick over the bones. Same old, same old.

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The regulators in this case being ASIC, who are very thorough. Watch this space.

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ASIA in relation to PVL. But hopefully the liquidators will go after the directors and also PVL itself if it overstepped it's role as a shareholder.

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I expect the directors are not getting a lot of sleep at the moment,

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Why? Yardley and the directors need a conscious to lose sleep.

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So Hydroworks was in truth just another metal fabricator. Albeit with some good staff. Apart from EBITDA multiples it had no value.

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My mum in-law was just saying she always wondered what had happened to Mr Humphries.

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Raises questions about how the company promoted itself to investors if the IP had no or little value.

Was Callaghan a funder under the tech incubator model and if so how did it pass DO.

BTW am aware of other PVL companies where the IP position is not as it has been presented in my view.

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If you ever needed a reason to sell your Powerhouse shares this article is it.

What a disaster.

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Yardley says “good trajectory”, contemplating IPO. Then he puts HydroWorks into liquidation. Huge losses all around. What game is Yardley playing?

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I find NBR constant misquoting very frustrating and have chosen not respond but since you ask about this quote the full quote was in reference to this article published in the Sydney Morning Herald and the Age http://www.smh.com.au/business/inside-melbournes-secret-suburban-hydro-p.... As with many of the other shareholders I was hoping that the management would take our advice but they did not and I did think this project could put them on a new trajectory.

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A $12.6m hole means things were going seriously wrong for a long time. Clearly questions should be asked of the Hydroworks board including the current and former CEO of Powerhouse. In my view this just further demonstrates the lack of business acumen.

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How about addressing these statements Russell?

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And add the obvious disconnect between management and those tinkering with the tools on the shop floor.

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Russell Yardley claims HydroWorks “better trajectory” and contemplates IPO. Then puts HW into liquidation with huge losses. What game is Yardley playing?

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To be fair I think Yardley is trying to clean up a big mess, created by the management and former board. Aided by Callaghan Innovation and Canterbury Development Corporation.

Why no one asked any hard questions of PVL raises concerns.

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Former Board? Russell Yardley was on the "former Board". He is culpable.

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The dates of my appointment are on public record I was appointed 28 February 2017 and my first board meeting was 28 March. I was appointed chairman 15 June 2017. I am accountable for the decisions I and the board have made since those dates.

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Unfortunately for you Russell, you will be tainted by association. Fair or not, that's just how it goes.

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The Hydroworks mess was created before Mr Yardley became involved with PVL, under the direction of the then CEO Stephen Hampson and the current CEO of PVL Paul Vinney.

I just wonder if the board of directors of PVL had any idea what was happening with Hydroworks and in fact any of the investee companies.

I suspect they were being feed BS from the management about what was happening, if not then they really do have a lot to answer.

I think if anyone did an independent audit of the investee comapnies they might be surprised to find out what is real and what is PR.

My advise is the emperor has no clothes.

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The failure of HydroWorks is not a surprise given that it was a capital investment project based company, nor should it also be a surprise that there is not much saleable IP as an asset as most of the "IP"would be embedded with the engineers, fabricators and the creation of bespoke solutions. HydroWorks was not a product based company but an integrated systems provider. Capital investment companies typically lurch from project to project in terms of cash flow and the catch 22 is they need to show great stability and ability to deliver to get that next order. Fail to provide that external appearance, then orders (and cash flow) stop or slow down, creditors start to be pushed out in terms of payables and then you are in high risk territory. It would have needed a parent or investors with deeper equity pockets and /or a longer time-frame. But I suspect without knowing the facts that this was not just an issue of cash but direction, disclosure, management and handling of information. The decision to list on the ASX probably didn't help but do we know what the options were.

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all very good points and all points that a "smart" investor or shareholder would have been aware of. It is no wonder that most Venture Capital investment is into software etc and not hardware, because (excuse the pun) hardware is hard.

The decision to buy a manufacturing operation (Mace Engineering) to create the illusion of scale etc was a very poor one, especially when that engineering business despite doing $10m+ was losing money.

Any IP or smart technology that was part of the original hydroworks was lost in the mix. All of this was being done to window dress the company for a possible listing - all for the benefit of the PVL shareholder and not the overall business.

they have repeated the exercise with Crop Logic - although managed to get the IPO through so at least that business has some cash on hand, which will buy them time.

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