RCR Tomlinson Ltd (Administrators Appointed) ACN and subsidiaries as listed in Annexure A (collectively, the RCR Group or the Companies)

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1 RCR Tomlinson Ltd (Administrators Appointed) ACN and subsidiaries as listed in Annexure A (collectively, the RCR Group or the Companies) Initial Information for Creditors Jamie Harris, Matthew Caddy, Rob Brauer and I were appointed Voluntary Administrators (Administrators) of RCR Tomlinson Ltd (Administrators Appointed) and each of its wholly owned subsidiaries listed in Annexure A on 21 November We have been appointed to represent the interests of all creditors. We are responsible for taking control of RCR Group s assets and business, investigating RCR Group s affairs, reporting and providing opinions to creditors and holding meetings of creditors to make decisions on the future of RCR Group. According to RCR Group s records, you are or may be a creditor of RCR Group. The purpose of this document is to provide you with information about the voluntary administration and your rights as a creditor. Declaration of Independence, Relevant Relationships and Indemnities (DIRRI) We attach our DIRRI. The DIRRI assists you to understand any relevant relationships that we have, and any indemnities or upfront payments that have been provided to us. We have considered each relationship and it is our opinion that none of the relationships disclosed in the DIRRI result in a conflict of interest or duty, or affect our independence. Court Orders regarding the conduct of the voluntary administrations On 23 November 2018, the Administrators sought and obtained orders from the Supreme Court of NSW in relation to the following: entering into a funding agreement; enabling the Administrators to transfer funds as required between the entities under Voluntary Administration; operating the Voluntary Administrations through a consolidated bank account or accounts, if necessary; and dispensation to issue the notice of the first meetings of creditors through electronic means where possible. A copy of the orders that were made can be found at this link: What you should do You should: read the attached information; decide whether you are going to participate in the first meeting; and if so complete and return your proof of debt and proxy form (if required) to Link Market Services (details of which are provided below) by 1:00PM AEDT on Friday, 30 November

2 Meeting of creditors As voluntary administrators, we are required to hold two meetings of creditors. First meetings of creditors The first meeting of creditors of the RCR Group has been convened for Monday, 3 December 2018 to be held concurrently at the following locations: Sydney Time: 1:00PM (AEDT) Address: The Grand Lodge, Sydney Masonic Centre Conference & Function Centre, 66 Goulburn Street, Sydney NSW 2000 Brisbane Time: 12:00PM (AEST) Address: Cliftons Brisbane, 3/288 Edward Street, Brisbane City Qld 4000 Melbourne Time: 1:00PM (AEDT) Address: Level 17 Function Room, RACV City Club, 501 Bourke Street, Melbourne Vic 3000 Perth Time: 10:00AM (AWST) Address: Duxton Hotel Perth, 1 St Georges Terrace, Perth WA 6000 The purpose of this meeting is to consider: our appointment; whether to appoint a Committee of Inspection. We attach a notice of meeting. The Administrators propose holding the first meeting of creditors for all companies in Administration concurrently for convenience and because of the common interests of many creditors of the Companies. Creditors should be aware that certain companies in the RCR Group are parties to a Deed of Cross Guarantee (DXG). For the purposes of the first meetings of creditors, the effect of the DXG is to allow creditors who are owed amounts by one company in the RCR Group to participate and vote as contingent creditors of the other companies which are parties to the DXG. Annexure A sets out which of the RCR Group entities are party to the DXG. To participate in this meeting, you must submit a proof of debt and information to substantiate your claim as a creditor. If the creditor is a person and will attend the meeting, this is all that is required. However, if the creditor is another type of entity (such as a company), they must also appoint a person a proxy or person authorised under a power of attorney to vote on behalf of the creditor at the meeting. A proxy also may be appointed if the creditor is a person, but is not available to attend the meeting. You can appoint the chairperson of the meeting as your proxy. Proof of debt and proxy forms are attached. To ensure that the meeting is conducted as efficiently as possible, these documents should be lodged with Link Market Services (details of which are provided below) by 1:00PM AEDT on Friday, 30 November Registration for the meeting will commence an hour before the meeting time on the day of the meeting. Creditors who are unable to attend in person may view the meeting via a webcast subject to providing relevant proof of debt and proxy documents in advance. Please contact Link Market Services on or before COB 30 November 2018 should you wish to view the meeting via a webcast. Creditors will be able to ask questions via the webcast, 2

3 however, please note creditors will not be able to vote via the webcast. Creditors may view the meeting by webcast and participate in voting by nominating a proxy to attend and vote on their behalf as described above. We also attach general information for attending and voting at meetings of creditors. Committee of Inspection At the first meeting, creditors will consider whether a Committee of Inspection (COI) should be appointed. The role of a COI is to consult with the voluntary administrators and receive reports on the conduct of the administration. A COI can also approve the voluntary administrators fees. It is our opinion that a COI would be useful to assist with the conduct of the voluntary administration. We attach a copy of the information sheet Committees of Inspection issued by ARITA. You should consider whether you would like to act as a member of the COI, if one is appointed. Second meeting of creditors We will also in due course call a second meeting of creditors. The purpose of that meeting is for creditors to consider our report and make a decision on the future of RCR Group. Before that meeting you will be sent the notice of meeting and a detailed report which will set out the options for the RCR Group s future. We will also provide our opinion as to what option we think is in the best interests of creditors. You are encouraged to attend these meetings and participate in the voluntary administration process. Question What is a voluntary administration? Answer A voluntary administration, or VA, in this case is a process initiated by the director(s) of the companies when they form the view the company is, or is likely to become, insolvent. Insolvent means that the company is, or is likely to become, unable to pay its debts when they fall due. The objective of a voluntary administration is to preserve as much as possible of the business of the company or, if that is not feasible, seek a better outcome for creditors than an immediate liquidation of the company. The process involves the appointment of a voluntary administrator to the company to administer and investigate the business, property, affairs and financial circumstances of the company. A voluntary administrator must complete investigations, form an opinion about the company s financial position and its future and issue a detailed report to creditors of the company. Creditors are then given the opportunity to vote on the future of the company. What are your rights as a creditor? We attach a copy of the information sheet Creditor Rights in Voluntary Administrations issued by the Australian Restructuring Insolvency & Turnaround Association (ARITA). It includes information on your rights to: make reasonable requests for information; give directions to the Administrators; appoint a reviewing liquidator; and replace us as Administrators. 3

4 Question What happens to your debt? Answer All creditors of RCR Group are now creditors in the voluntary administration and your debt will be dealt with in the voluntary administration. It is important to note that a voluntary administration creates restrictions on creditors being able to enforce their rights. You generally cannot enforce your claim, recover your property, enforce your security, commence an action to place the company into liquidation or act on a personal guarantee. If you have leased property to RCR Group, have a retention of title claim or have a registered personal property security interest in relation to RCR Group, please contact my staff as soon as possible by at rcrtomgeneral@mcgrathnicol.com. We are continuing to trade the business of RCR Group. If you are a supplier or employee, you should have received a separate communication on how this appointment affects your ongoing dealings with RCR Group. If you have not, please contact rcrtomgeneral@mcgrathnicol.com. What is the cost of the voluntary administration? We get paid out of RCR Group s money, including realisations from assets or from money paid to us by others. If there is not enough money in the voluntary administration, we do not get paid in full. We attach our Initial Remuneration Notice which provides you with information about how we propose to be paid for undertaking the voluntary administration. We will seek your approval of our remuneration at the second meeting of creditors, unless that remuneration is approved earlier by a COI (if one is appointed). We will provide you with detailed information about what tasks we have undertaken and the costs of those tasks. What happens next with the voluntary administration? We will proceed with the voluntary administration, which will include: trading the business; potentially realising some or all of the assets of the company if that is the most appropriate course of action; preparing for and holding the meetings of creditors; investigating RCR Group s affairs; analysing any offer for a Deed of Company Arrangement that is proposed; and preparing our report to creditors. As discussed above, you will receive further correspondence from us before the second meeting of creditors. Where can you get more information? ARITA provides information to assist creditors to understand voluntary administrations and insolvency. This information is available from ARITA s website at A copy of the information sheet, Insolvency information for directors, employees, creditors and shareholders, issued by the Australian Securities and Investments Commission (ASIC) is also attached for your information. 4

5 If you require any further information, please contact Link Market Services on or by Dated: 26 November 2018 Jason Preston Voluntary Administrator Attachments: 1 Annexure A The RCR Group 2 ARITA Information Sheet Creditor Rights in Voluntary Administrations 3 Declaration of Independence, Relevant Relationships and Indemnities 4 Notice of Meeting 5 General information for attending and voting at meetings of creditors 6 ARITA Information Sheet Committees of Inspection 7 Initial Remuneration Notice 8 ASIC Information Sheet Insolvency information for directors, employees, creditors and shareholders 9 Proof of Debt form 10 Proxy form 5

6 Annexure A: RCR Group - entities over which the Administrators are appointed Company ACN DXG 1 RCR Tomlinson Ltd Yes 2 A.C.N Pty Limited No 3 Applied Laser Pty Ltd No 4 Positron Group Pty Ltd Yes 5 Positron Power Pty. Ltd No 6 RCR Asset Maintenance Pty Ltd No 7 RCR Building Products (Holdings) Pty Ltd No 8 RCR Building Services (Egan Bros) Pty Ltd No 9 RCR Corporate Pty. Ltd Yes 10 RCR Energy (Gladstone) Pty Ltd Yes 11 RCR Energy (Stelform VRBT) Pty Ltd No 12 RCR Energy (Stelform) Pty Ltd No 13 RCR Energy Pty Ltd Yes 14 RCR Energy Service Pty Ltd Yes 15 RCR Haden (Holdings) Pty Ltd Yes 16 RCR Haden (Telco) Pty Ltd Yes 17 RCR Haden Pty Ltd Yes 18 RCR Infrastructure (Corporate) Pty Ltd Yes 19 RCR Infrastructure Group (XNFK) Pty Ltd Yes 20 RCR Infrastructure Pty Ltd Yes 21 RCR Laser Pty Ltd Yes 22 RCR Mining Pty Ltd Yes 23 RCR O'Donnell Griffin (Holdings) Pty Ltd Yes 24 RCR O'Donnell Griffin (Projects) Pty Ltd Yes 25 RCR O'Donnell Griffin Pty Ltd Yes 26 RCR Oil & Gas Pty Ltd Yes 27 RCR Power Pty Ltd Yes 28 RCR Rel Corp Management Services Pty Ltd No 29 RCR Resolve FM (Engineering) Pty Ltd No 30 RCR Resolve FM (Holdings) Pty Ltd Yes 31 RCR Resolve FM Pty Ltd Yes 32 RCR Resources (Heat Treatment) Pty Ltd No 33 RCR Resources (Tripower) Pty Ltd Yes 34 RCR Resources Pty Ltd Yes 35 RCR Tomlinson (Custodian) Pty Ltd Yes 36 RCR Trafalgar Building Products Pty Ltd No 37 RCR Water (WA) Pty Ltd Yes 38 RCR Water Pty. Ltd Yes 39 RCReate Pty Ltd No 40 Sartap Pty Ltd No 41 Stelform Piping Systems Pty Ltd No 1

7 Creditor Rights in Voluntary Administrations As a creditor, you have rights to request meetings and information or take certain actions: Right to request information Right to give directions to voluntary administrator Right to appoint a reviewing liquidator Right to replace voluntary administrator Right to request information Information is communicated to creditors in a voluntary administration through reports and meetings. In a voluntary administration, two meetings of creditors are automatically held. You should expect to receive reports and notice of these meetings: The first meeting is held within 8 business days of the voluntary administrator s appointment. A notice of meeting and other information for this meeting will be issued to all known creditors. The second, or decision, meeting is usually held within 6 weeks of the appointment, unless an extension is granted. At this meeting, creditors will get to make a decision about the company s future. Prior to this meeting the voluntary administrator will provide creditors with a notice of the meeting and a detailed report to assist in making your decision. Requests must be reasonable. They are not reasonable if: (a) complying with the request would prejudice the interests of one or more creditors or a third party (b) the information requested would be privileged from production in legal proceedings (c) disclosure would found an action for breach of confidence (d) there is not sufficient available property to comply with the request (e) the information has already been provided Important information will be communicated to creditors prior to and during these meetings. Creditors are unable to request additional meetings in a voluntary administration. (f) the information is required to be provided under law within 20 business days of the request Creditors have the right to request information at any time. A voluntary administrator must provide a creditor with the requested information if their request is reasonable, the information is relevant to the voluntary administration, and the provision of the information would not cause the voluntary administrator to breach their duties. A voluntary administrator must provide this information to a creditor within 5 business days of receiving the request, unless a longer period is agreed. If, due to the nature of the information requested, the voluntary administrator requires more time to comply with the request, they can extend the period by notifying the creditor in writing. (g) the request is vexatious If a request is not reasonable due to (d), (e) or (f) above, the voluntary administrator must comply if the creditor meets the cost of complying with the request. Otherwise, a voluntary administrator must inform a creditor if their information request is not reasonable and the reason why. ARITA ACN Level 5, 191 Clarence Street, Sydney NSW 2000 Australia GPO Box 4340, Sydney NSW 2001 t e admin@arita.com.au arita.com.au AUSTRALIAN RESTRUCTURING INSOLVENCY & TURNAROUND ASSOCIATION

8 Right to give directions to voluntary administrator Creditors, by resolution, may give a voluntary administrator directions in relation to a voluntary administration. A voluntary administrator must have regard to these directions, but they are not required to comply with the directions. If a voluntary administrator chooses not to comply with a direction given by a resolution of the creditors, they must document their reasons for not complying. An individual creditor cannot provide a direction to a voluntary administrator. Right to appoint a reviewing liquidator Creditors, by resolution, may appoint a reviewing liquidator to review a voluntary administrator s remuneration or a cost or expense incurred in a voluntary administration. The review is limited to: remuneration approved within the six months prior to the appointment of the reviewing liquidator, and expenses incurred in the 12 months prior to the appointment of the reviewing liquidator. The cost of the reviewing liquidator is paid from the assets of the voluntary administration, in priority to creditor claims. An individual creditor can appoint a reviewing liquidator with the voluntary administrator s consent, however the cost of this reviewing liquidator must be met personally by the creditor making the appointment. Right to replace voluntary administrator At the first meeting, creditors have the right to remove a voluntary administrator and appoint another registered liquidator to act as voluntary administrator. A creditor must ensure that they have a consent from another registered liquidator prior to the first meeting if they wish to seek the removal and replacement of a voluntary administrator. Creditors also have the opportunity to replace a voluntary administrator at the second meeting of creditors: If creditors vote to accept a proposed deed of company arrangement, they can appoint a different registered liquidator as the deed administrator. If creditors vote to place the company into liquidation, they can appoint a different registered liquidator as the liquidator. It is however usual for the voluntary administrator to act as deed administrator or liquidator. It would be expected that additional costs would be incurred by an alternate deed administrator or liquidator to gain the level of knowledge of the voluntary administrator. Like with the first meeting, a creditor must ensure that they have a consent from another registered liquidator prior to the second meeting if they wish to seek to appoint an alternative registered liquidator as deed administrator or liquidator. For more information, go to Version: July (VA) - INFO - CREDITOR RIGHTS INFORMATION SHEET V1_0.DOCX AUSTRALIAN RESTRUCTURING INSOLVENCY & TURNAROUND ASSOCIATION PAGE 2

9 Declaration of Independence, Relevant Relationships and Indemnities (DIRRI) Corporations Act 2001 RCR Tomlinson Ltd (Administrators Appointed) ACN (RCR or the Company) and Associated Entities set out in Appendix 1 (collectively the RCR Group) The Corporations Act 2001 and professional standards require the Practitioner/s appointed to an insolvent entity to make a declaration as to: their independence generally; relationships, including a) the circumstances of the appointment; b) any relationships with the company and others within the previous 24 months; c) any prior professional services for the company within the previous 24 months; d) that there are no other relationships to declare; and any indemnities given, or up-front payments made, to the Practitioner. This declaration is made in respect of ourselves, our partners, the firm McGrathNicol, which for the purpose of this declaration includes the McGrathNicol Partnership, the McGrathNicol Advisory Partnership and McGrathNicol Services Pty Ltd. Independence We, Jason Preston, William James Harris, Matthew Wayne Caddy and Robert Conry Brauer of the firm McGrathNicol have undertaken a proper assessment of the risks to our independence prior to accepting the appointment as Voluntary Administrators of RCR and 40 other companies in the RCR Group in accordance with the law and applicable professional standards. This assessment identified no real or potential risks to our independence. We are not aware of any reasons that would prevent us from accepting those appointments. Declaration of Relationships Circumstances of appointment On 13 August 2018, Rod Brown the Chairman of RCR approached Robyn McKern, a partner of McGrathNicol and Jason Ireland of McGrathNicol was approached by King & Wood Mallesons (KWM), in its capacity as legal advisors to the RCR Group, seeking to engage McGrathNicol on behalf of the RCR Group. Rod Brown knew Robyn McKern from past professional dealings in the early 2000 s in the Perth business community and a very limited number of minor communications since that time. We have a relationship with KWM as well as with other significant law firms we have worked with on restructuring and insolvency assignments in the Australian market. We believe the involvement of KWM in the referral does not result in a conflict of interest or duty because: 1

10 McGrathNicol undertakes work from time to time to assist clients of KWM, as do practitioners from other firms. This includes the appointment of McGrathNicol s registered liquidators to companies where KWM has provided legal services. The referral was unconditional. McGrathNicol has not previously undertaken an engagement in relation to the RCR Group either on referral from KWM or otherwise. Referrals from lawyers, accountants and other professional advisers are commonplace and do not impact our independence in carrying out our duties as Voluntary Administrators. Our pre-appointment engagements with the RCR Group Our involvement with the RCR Group has occurred across two distinct phases of work, details of which are summarised below. Phase 1 On 30 July 2018, RCR entered a trading halt. On 1 August 2018, trading in the shares of RCR was voluntarily suspended following disclosure to the ASX of cost overruns in certain of its key projects that would have a material impact on its earnings. Our role during Phase 1 was conducted whilst the company was seeking to raise additional equity capital with a view to ending its ASX trading suspension. On 14 August 2018, we were engaged on behalf of the RGR Group to provide assistance in assessing the short-term cashflow forecast and the forecasting process of the RCR Group and to undertake contingency planning for a potential appointment of Voluntary Administrators to the RCR Group. In the course of Phase 1, we: Held a meeting with RCR s Chairman Rod Brown and RCR senior management and KWM to obtain an understanding of the RCR Group s operations, financial position, key projects, short-term cashflow forecast and the assumptions and process used to prepare the short-term cashflow forecast. Jason Ireland and McGrathNicol staff subsequently attended 3 further meetings with RCR management, including one attended by Bruce James (CEO and director). Details of those meetings are included in appendix 2. Prepared a document summarising our preliminary views on the RCR Group s short-term cashflow forecast, including the risks inherent in the forecast. Prepared a contingency planning document that could assist in implementing a Voluntary Administration plan should the capital raising have proved unsuccessful and the RCR Group sought to appoint Voluntary Administrators. We commenced work on 15 August 2018 and delivered a draft short-term cashflow report to RCR on 23 August No further work was done on the draft report until a subsequent meeting with Bruce James and RCR Group management on 19 September 2018 where we discussed our draft report. We finalised our report and issued it in final form on 10 October Our contingency planning report was submitted in draft on 4 September We did no further work on that report after that time and we were not requested to issue our report in final form. We received remuneration totalling $130, for our Phase 1 engagement. This represented full payment of our account. The majority of these fees ($120,000) were paid into the McGrathNicol trust account by the RCR Group in advance of invoicing for that work. The sum of $10,160.80, representing the GST payable which was inadvertently left out of the original transfer, was paid by the RCR Group immediately after invoicing. We will repay the sum of $10, to a bank account of one of the RCR Group companies as soon as practicable, to ensure there are no transactions that present a threat to our independence during the pre-appointment period. 2

11 Phase 2 We were approached by KWM on 24 October 2018, again in its capacity as legal advisor to RCR, again seeking McGrathNicol s assistance on behalf of the RCR Group. RCR management was concerned there was a risk of breaching financial covenants with its secured lenders at the end of December 2018 and RCR was in the process of finalising its quarterly compliance certificate for delivery to its secured lenders on 30 October In Phase 2, we were engaged to provide further assistance in assessing the RCR Group s cashflow forecast. We were also asked to update the contingency planning work we had undertaken in Phase 1. In our role in Phase 2, we: Obtained an updated understanding of the RCR Group s financial position, recent and forecast trading performance and forecast cashflow. Gained a more detailed understanding of the RCR Group s corporate and organisational structure, operations, key project and contracts in order to undertake more detailed contingency planning for a potential Voluntary Administration. Participated in meetings with RCR Group management and representatives of its secured lenders where RCR management presented its forecast and funding requirements to its secured lenders. Between 26 October 2018 and 21 November 2018 we attended 15 meetings, details of which are summarised in appendix 3. The Group s revised cashflow forecasts indicated a substantial funding requirement in excess of the RCR Group s existing facility limits. RCR submitted a formal request to its secured lenders for additional financial support in a meeting that we attended on 20 November On 21 November 2018, the request was declined by its secured lenders, resulting in the directors of RCR and 40 other companies in the RCR Group appointing Voluntary Administrators on 21 November We received remuneration totalling $399, for our Phase 2 engagement. This amount was paid into McGrathNicol s trust account in two tranches by the RCR Group prior to invoicing. We have no unpaid accounts or accrued work in progress in relation to Phase 2 of the engagement. Our independence In our opinion, our pre-appointment engagements with the RCR Group do not affect our independence for the following reasons: Our dealings with RCR Group had an information gathering, short term cash flow analysis and planning focus and the nature of this work would not be subject to review and challenge during the course of the Voluntary Administration. Our pre-appointment engagements did not involve the provision of any advice to any RCR Group member s board, their individual directors or the management of the RCR Group on their duties under the Corporations Act 2001, the management of the RCR Group or in relation to their management of the affairs of or the solvency or insolvency of the RCR Group. It is recognised by the Courts that developing an evolving contingency plan for a potential Voluntary Administration appointment is appropriate and does not represent a threat to the independence of the potential appointees should the Voluntary Administration proceed. 3

12 All amounts received by McGrathNicol from RCR Group were prepaid into our trust account before being applied to pay our fees and expenses. As such, we have never been in the position of being a creditor of any member of the RCR Group. The level of work undertaken in Phases 1 and 2 of our engagement is a consequence of the large and complex nature of the RCR Group s businesses across multiple locations in Australia and overseas. In a corporate group the size and complexity of RCR Group, a degree of contingency planning prior to a Voluntary Administration appointment is in the interests of creditors and can support the preservation of value. It is recognised by the Courts and the ARITA Code of Professional Practice that pre-appointment advice on the insolvency process and available options does not amount to an impediment to accepting an appointment. The nature of the work we undertook was such that it would not be subject to review and challenge during the course of the Voluntary Administration. Nor would the advice influence our ability to be able to fully comply with the statutory and fiduciary obligations associated with the Voluntary Administration of RCR and the other companies in the RCR Group in an objective and impartial manner. We have provided no other advice to the RCR Group prior to our appointment beyond that outlined in this DIRRI. We did not advise the directors of RCR or any other member of the RCR Group in their capacity as directors and remain independent of them. Relevant Relationships (excluding professional services to the Insolvent) We or a member of our firm, have or have had within the preceding 24 months, a relationship with: Name Nature of relationship Reasons Commonwealth Bank of Australia (CBA), MUFG Bank Ltd (MUFG) and Swiss Re, Chubb, HCC (the Insurance Bond Providers) (together the Syndicate of Lenders) The Syndicate of Lenders has provided funding and guarantee facilities to the RCR Group and has been granted security in the form of General Security Agreements by the majority of entities within the RCR Group. McGrathNicol undertakes corporate recovery and advisory work from time to time on instructions from each of CBA, MUFG and the Insurance Bond Providers. We believe this relationship does not result in a conflict of interest or duty because: Each professional engagement undertaken for any member of the Syndicate of Lenders in relation to a particular entity or group of entities is conducted on an entirely separate basis which has no bearing on this appointment. These engagements are only commenced after full regard is given to potential conflicts of interest in relation to all interested stakeholders. McGrathNicol has not undertaken an engagement for any member of the Syndicate of Lenders in respect of the RCR Group. Given these factors, our independence in acting as Voluntary Administrator of the RCR Group has not been affected. 4

13 Prior professional services to the Insolvent Other than as disclosed in this DIRRI, neither we, nor our firm, have provided any professional services to the RCR Group in the previous 24 months. No other relevant relationships to disclose There are no other known relevant relationships, including personal, business and professional relationships, from the previous 24 months with the RCR Group, an associate of the RCR Group, a former insolvency practitioner appointed to the RCR Group, or any person or entity that has security over the whole or substantially the whole of the RCR Group s property that should be disclosed. Indemnities and Up-front Payments We have not been indemnified in relation to this Voluntary Administration, other than any indemnities that we may be entitled to under statute and we have not received any up-front payments in respect of our remuneration or disbursements. Appointments to Members of a Corporate Group As specified on page one of this Declaration, we have been appointed as Voluntary Administrators of RCR and 12 other companies within the RCR Group, as listed at Appendix 1. We are of the view that the appointment to the 41 companies within the RCR Group will have significant benefits to the conduct of the Voluntary Administration particularly in that this will provide for cost-savings and enable an accurate as possible view to be obtained of the activities and financial position of the companies as a whole. We understand that the liabilities of each of the entities to which we have been appointed are subject to a cross guarantee under ASIC Class Order 98/1418. We are aware that there are inter-company transactions within the RCR Group but at this time are not aware of any potential conflicts of interest arising from the appointments over the various RCR Group members. However, to the extent it becomes apparent that pre-appointment dealings between companies in the group may give rise to a conflict which may impact the outcome for creditors of either company, then we undertake to disclose any such conflicts to the creditors and as appropriate, seek Court directions as to the means of resolving the potential conflict. Dated: 23 November Signed, Jason Preston Signed, William James Harris Signed, Matthew Wayne Caddy Signed, Robert Conry Brauer 5

14 Note: 1 If the circumstances change or new information is identified, we are required under the Corporations Act 2001 and the ARITA Code of Professional Practice to update this Declaration and provide a copy to creditors with our next communication, as well as table a copy of any replacement Declaration at the next meeting of the insolvent s creditors. 2 Any relationships, indemnities or up-front payments disclosed in the DIRRI must not be such that the Practitioner is no longer independent. The purpose of components B and C of the DIRRI is to disclose relationships that, while they do not result in the Practitioner having a conflict of interest or duty, ensure that creditors are aware of those relationships and understand why the Practitioner nevertheless remains independent. Please note that the presentation of the above information is in accordance with the standard format suggested by ARITA. 6

15 Appendix 1 entities in Voluntary Administration Company ACN RCR Tomlinson Ltd RCR Tomlinson (Custodian) Pty Ltd RCR Corporate Pty. Ltd RCR Resources Pty Ltd RCR Energy (Gladstone) Pty Ltd RCR Resources (Tripower) Pty Ltd RCR Mining Pty Ltd RCR Energy Pty Ltd RCR Energy Service Pty Ltd Positron Group Pty Ltd RCR Power Pty Ltd RCR Laser Pty Ltd RCR Oil & Gas Pty Ltd RCR Infrastructure Pty Ltd RCR Infrastructure Group (XNFK) Pty Ltd RCR O'Donnell Griffin Pty Ltd RCR Haden Pty Ltd RCR Haden (Telco) Pty Ltd RCR Haden (Holdings) Pty Ltd RCR Resolve FM Pty Ltd RCR Resolve FM (Holdings) Pty Ltd RCR Infrastructure (Corporate) Pty Ltd RCR Water Pty. Ltd RCR Water (WA) Pty Ltd RCR O'Donnell Griffin (Holdings) Pty Ltd RCR O'Donnell Griffin (Projects) Pty Ltd Applied Laser Pty Ltd RCR Energy (Stelform) Pty Ltd RCR Energy (Stelform VRBT) Pty Ltd Stelform Piping Systems Pty Ltd Sartap Pty Ltd RCR Resources (Heat Treatment) Pty Ltd Positron Power Pty. Ltd RCR Asset Maintenance Pty Ltd RCR Building Products (Holdings) Pty Ltd

16 A.C.N Pty Limited RCR Trafalgar Building Products Pty Ltd RCR Building Services (Egan Bros) Pty Ltd RCR Resolve FM (Engineering) Pty Ltd RCR Rel Corp Management Services Pty Ltd RCReate Pty Ltd

17 Appendix 2 Phase 1 meetings Date McGrathNicol attendees External attendees Agenda / Purpose 13/08/18 Jason Ireland and other McGrathNicol staff 15/08/18 Jason Ireland and other McGrathNicol staff Rod Brown (Chairman), RCR senior management KWM representatives RCR senior management Introduction and general background discussion Discuss short-term cashflow structure and assumptions 17/08/18 Jason Ireland and other McGrathNicol staff RCR senior management Discuss key projects and impact on cashflow forecast 19/09/18 Jason Ireland and other McGrathNicol staff Bruce James (Director, CEO), RCR senior management Finalise short-term cashflow document 9

18 Appendix 3 Phase 2 meetings Date McGrathNicol attendees External attendees Agenda / Purpose 25/10/18 Jason Ireland, Jason Preston 30/10/18 Jason Ireland, Jason Preston and other McGrathNicol staff 05/11/18 Jason Ireland and other McGrathNicol staff RCR directors: Rod Brown, Bruce James, David Robinson, Lloyd Jones, Sue Palmer, RCR senior management Bruce James, RCR senior management KWM representatives RCR senior management Introduction and general background update discussion Discuss approach to cashflow forecast, options analysis and the impact of options developed by RCR management on future earnings and cashflows. Discuss key solar and rail projects and impact on cashflow forecast 06/11/18 Jason Ireland and other McGrathNicol staff RCR senior management Discuss updated cashflow forecast and assumptions 07/11/18 Jason Ireland, Jason Preston and other McGrathNicol staff 08/11/18 and continuing on 09/11/18 Jason Ireland, Jason Preston and other McGrathNicol staff 12/11/18 Jason Ireland, Jason Preston and other McGrathNicol staff 13/11/18 Jason Ireland, Jason Preston and other McGrathNicol staff RCR directors: Rod Brown, Bruce James, David Robinson, Lloyd Jones, Sue Palmer, RCR senior management RCR directors: Rod Brown, Bruce James, David Robinson, Lloyd Jones, Sue Palmer, RCR senior management Bruce James, RCR senior management Bruce James, RCR senior management Board discussion and update on cashflow forecast Discuss group financial position, latest cashflow forecast and options available to the Group, including formal insolvency appointments Discuss Group cash position, cashflow forecast, funding requirement and impact of RCR management s restructuring options on future cashflows Discuss RCR management s restructuring options and impact on forecast P&L and cashflow 14/11/18 Jason Ireland, Jason Preston and other McGrathNicol staff Rod Brown, Bruce James, David Robinson, Lloyd Jones, Sue Palmer, RCR senior management Representatives of the Group s secured lenders Discuss Group cash position, cashflow forecast, funding requirement and potential need for support of the secured lenders 10

19 14/11/18 Jason Ireland, Jason Preston and other McGrathNicol staff 15/11/18 Jason Ireland and other McGrathNicol staff Representatives of KWM Representatives of Herbert Smith Freehills Bruce James, RCR senior management Bruce James, RCR senior management Discuss Group cash position, cashflow forecast, funding requirement and impact of RCR management s restructuring options on future cashflows Discuss restructuring of Group overheads 16/11/18 Jason Ireland, Jason Preston and other McGrathNicol staff 19/11/18 Jason Ireland and other McGrathNicol staff 20/11/18 Jason Ireland, Jason Preston and other McGrathNicol staff 20/11/18 Jason Ireland, Jason Preston and other McGrathNicol staff Rod Brown, Bruce James, David Robinson, Lloyd Jones, Sue Palmer, RCR senior management Representatives of the Group s secured lenders Representatives of KWM Representatives of Herbert Smith Freehills acting for the secured lenders Bruce James, RCR senior management Rod Brown, Bruce James, David Robinson, Lloyd Jones, Sue Palmer, RCR senior management Rod Brown, Bruce James, David Robinson, Lloyd Jones, Sue Palmer, RCR senior management Representatives of the Group s secured lenders Representatives of KWM Representatives of Herbert Smith Freehills acting for the secured lenders Discuss Group cash position, cashflow forecast, funding requirement and potential need for support of the secured lenders Discuss restructuring plan and presentation of the plan by management to the secured lenders Discuss Group cash position, cashflow forecast, funding requirement and request for support of the secured lenders Discuss Group cash position, cashflow forecast, funding requirement, request for support of the secured lenders and consequences of support not being provided 11

20 Notice of Meeting RCR Tomlinson Ltd (Administrators Appointed) ACN and subsidiaries as listed in Annexure A (collectively, the RCR Group or the Companies) NOTICE OF MEETING OF CREDITORS OF COMPANY UNDER EXTERNAL ADMINISTRATION 1. Notice is now given that a meeting of the creditors of the RCR Group will be held concurrently on Monday, 3 December 2018 at The Grand Lodge, Sydney Masonic Centre Conference & Function Centre, 66 Goulburn Street, Sydney NSW 2000 (1:00PM AEDT) with video conference and voting facilities available at: Brisbane: Cliftons Brisbane, 3/288 Edward Street, Brisbane City Qld 4000 (12:00PM AEST); Melbourne: Level 17 Function Room, RACV City Club, 501 Bourke Street, Melbourne Vic 3000 (1:00PM AEDT); and Perth: Duxton Hotel Perth, 1 St Georges Terrace, Perth WA 6000 (10:00AM AWST). 2. The purpose of the meeting is to determine: (a) that the meetings are to be held concurrently; (b) whether to remove the administrator(s) from office; (c) whether to appoint someone else as administrator(s) of the RCR Group; (d) whether to appoint a committee of inspection; and (e) if so, who are to be the committee s members. 3. The effect of Insolvency Practice Rules (Corporations) section (entitlement to vote as creditor at meetings of creditors) is: (1) A person other than a creditor (or the creditor s proxy or attorney) is not entitled to vote at a meeting of creditors. (2) Subject to subsections (3), (4) and (5), each creditor is entitled to vote and has one vote (3) A person is not entitled to vote as a creditor at a meeting of creditors unless: (a) his or her debt or claim has been admitted wholly or in part by the external administrator; or (b) he or she has lodged, with the person presiding at the meeting, or with the person named in the notice convening the meeting as the person who may receive particulars of the debt or claim: (i) those particulars; or (ii) if required a formal proof of the debt or claim. (4) A creditor must not vote in respect of: (a) an unliquidated debt; or (b) a contingent debt; or (c) an unliquidated or a contingent claim; or (d) a debt the value of which is not established; unless a just estimate of its value has been made. 1

21 4. Proofs of debt and proxies must be submitted by 1:00PM AEDT on Friday, 30 November Dated: 26 November 2018 Jason Preston Voluntary Administrator 2

22 RCR Tomlinson Ltd (Administrators Appointed) ACN and subsidiaries as listed in Annexure A (collectively, the RCR Group or the Companies) General Information for Attending and Voting at Meetings of Creditors Time and Place of Meeting Pursuant to Insolvency Practice Rules (Corporations) (IPR) 75-30, a meeting of creditors must be convened at the time and place the Chairperson believes are convenient for the majority of creditors entitled to receive notice of the meeting. Quorum Pursuant to IPR , unless a quorum is present, a meeting must not act for any purpose other than: the election of a chairperson; and the proving of debts; and the adjournment of the meeting. A quorum is present if two (2) or more persons are entitled to vote and at least two (2) persons are present at the meeting in person, by proxy or by power of attorney. A quorum is present if only one (1) person is entitled to vote and that person is present at the meeting in person, by proxy or by power of attorney. A person who participates in the meeting using electronic facilities is taken to be present in person at the meeting. A meeting is sufficiently constituted if only one (1) person is present in person, if the person represents personally or by proxy or otherwise a number of persons sufficient to constitute a quorum. Chairperson Pursuant to IPR 75-50, the external administrator is appointed Chairperson of the meeting. Alternatively, pursuant to IPR and IPR the external administrator may appoint someone else to act as chairperson of the meeting and authorise that person to use any proxies held by the external administrator on the external administrator s behalf. For the second meeting of creditors in a Voluntary Administration, the Administrator must chair the meeting pursuant to IPR Voting Pursuant to IPR 75-85, creditors will not be eligible to vote at the meeting unless they have lodged particulars of their debt or claim prior to or at the meeting. Accordingly, creditors who intend to vote at the meeting should ensure that they lodge a formal proof of debt with the external administrator prior to or at the meeting. Pursuant to IPR , a resolution put to the meeting is to be decided on the voices or by a poll, if one is requested. A poll may be requested by: the chairperson; or a person participating and entitled to vote at the meeting. 1

23 Pursuant to IPR , should a poll be requested: a resolution is passed if a majority in number and a majority in value vote in favour of the resolution; and a resolution is not passed if a majority in number and a majority in value vote against the proposed resolution. In the event of a deadlock, the chairperson may exercise a casting vote. In such situations, the minutes of the meeting must specify the chairperson s reasons for exercising, or not exercising, their casting vote. Proxies Pursuant to IPR , a person entitled to vote at a meeting may, in writing, appoint an individual as their proxy to attend and vote at the meeting on their behalf. Accordingly, creditors who are unable to attend the meeting but who wish to be represented should ensure that a validly executed proxy form is lodged with the external administrator prior to the meeting. Corporate Creditors Corporate creditors who wish to attend the meeting should note that an individual may only represent them if the corporation validly grants that person a proxy or power of attorney. Alternatively, section 250D of the Corporations Act provides that a corporation may, by resolution of its board, provide a standing authority for a specified person to represent the corporation at a specified meeting of creditors. A copy of any such resolution should be provided to the external administrator prior to attending the meeting. Committee of Inspection Pursuant to IPR 80-5, a person may only serve as a member of a Committee of Inspection if the person is: a creditor of the company personally; or the attorney of a creditor under a general power of attorney; or authorised in writing by a creditor; or a representative of the Commonwealth if a FEG claim has been, or the Commonwealth considers a claim is likely to be, made in relation to unpaid employee entitlements. Corporate creditors who are members of a Committee of Inspection may be represented by an individual authorised in writing by the member to represent the member on the committee. 2

24 Information Sheet: Committees of Inspection You have been elected to be, or are considering standing for the role of, a member of a Committee of Inspection (COI) in either a liquidation, voluntary administration or deed of company arrangement of a company (collectively referred to as an external administration). This information sheet is to assist you with understanding your rights and responsibilities as a member of a COI. What What is is a a COI? COI? A COI is a small group of creditors elected to represent the interests of creditors in the external administration. The COI advises and assists the external administrator and also has the power to approve and request certain things this is discussed in more detail below. Membership of the COI is a voluntary, unpaid position. Who can be elected to a COI? To be eligible to be appointed as a member of a COI, a person must be: A creditor A person holding the power of attorney of a creditor A person authorised in writing by a creditor; or A representative of the Commonwealth where a claim for financial assistance has, or is likely to be, made in relation to unpaid employee entitlements. If a member of the COI is a company, it can be represented by an individual authorised in writing to act on that creditor s behalf. It also allows the creditor to maintain its representation if a change in the individual is required A COI usually has between 5 and 7 members, though it can have more, or less, depending on the size of the external administration. A member of a COI can be appointed by: resolution at a meeting of creditors an employee or a group of employees owed at least 50% of the entitlements owed to employees of the company a large creditor or group of creditors that are owed at least 10% of the value of the creditors claims, If an employee or group of employees, or a large creditor or group of creditors, appoints a member to the COI, they cannot vote on the general resolution of creditors to appoint members to the COI. Each of these groups also have the power to remove their appointed member of the COI and appoint someone else. ARITA ACN Level 5, 191 Clarence Street, Sydney NSW 2000 Australia GPO Box 4340, Sydney NSW 2001 t e admin@arita.com.au arita.com.au AUSTRALIAN RESTRUCTURING INSOLVENCY & TURNAROUND ASSOCIATION

25 If you are absent from 5 consecutive meetings of the COI without leave of the COI or you become an insolvent under administration, you are removed from the COI. What are the roles and powers of a COI? A COI has the following roles: to advise and assist the liquidator, voluntary administrator or deed administrator (collectively referred to as the external administrator) to give directions to the external administrator to monitor the conduct of the external administration. In respect of directions, the external administrator is only required to have regard to those directions. If there is a conflict between the directions of the COI and the creditors, the directions of the creditors prevail. If the external administrator chooses not to comply with the directions of the COI, the external administrator must document why. A COI also has the power to: approve remuneration of the external administrator after the external administrator has provided the COI with a Remuneration Approval Report (a detailed report setting out the remuneration for undertaking the external administration) approve the use of some of the external administrator s powers in a liquidation (compromise of debts over $100,000 and entering into contracts over 3 months) require the external administrator to convene a meeting of the company s creditors request information from the external administrator approve the destruction of the books and records of the external administration on the conclusion of the external administration with the approval of the external administrator, obtain specialist advice or assistance in relation to the conduct of the external administration apply to the Court for the Court to enquire into the external administration. An external administrator is not required to convene a meeting of creditors if the request by the COI is unreasonable, or provide requested information if the request is unreasonable, not relevant to the administration or would cause the external administrator to breach their duties. A request to convene a meeting of creditors is unreasonable if: it would substantially prejudice the interests of a creditor or third party there are insufficient funds in the external administration to cover the cost of the request a meeting of creditors dealing with the same matters has already been held or will be held within 15 business days, or the request is vexatious. If a request for a meeting is reasonable, the external administrator must hold a meeting of creditors as soon as reasonably practicable. Version: July INFO - COI INFORMATION SHEET V1_0.DOCX AUSTRALIAN RESTRUCTURING INSOLVENCY & TURNAROUND ASSOCIATION PAGE 2