TO THE CREDITOR OR EMPLOYEE AS ADDRESSED

Transcription

1 TO THE CREDITOR OR EMPLOYEE AS ADDRESSED 25 February 2011 Dear Sir/Madam Grant Thornton Australia Ltd ABN Level Spring Street Melbourne Victoria 3000 GPO Box 4984WW Melbourne Victoria 3001 T F E info@grantthorntonvic.com.au W PRECISION REINFORCEMENTS PTY LTD (ADMINISTRATORS APPOINTED)( THE COMPANY ) I advise that Andrew Hewitt and I were appointed as joint and several Voluntary Administrators of the Company on 23 February 2011 pursuant to a resolution of the director of the Company in accordance with Section 436A(1) of the Corporations Act. I am now calling the first meeting of Creditors pursuant to Section 436E of the Corporations Act and enclose the following: 1. Notice of Meeting of Creditors. 2. Proof of Debt Form for the purposes of voting. 3. Proxy Form. 4. Question Sheet for the First Meeting. 5. Request for Creditor Contact Details. 6. IPA/ASIC Information for Creditors Circular. 7. Declaration of Independence, Relevant Relationships and Indemnities. 8. Schedule of hourly rates. 9. First Report to Creditors Please note that persons are not entitled to vote as a creditor at the meeting unless they have lodged with the Chairman of the meeting particulars of the debt they claim to be due to them from the Company. Corporate creditors are required to appoint a natural person to vote on their behalf at the meeting of creditors. Proofs of Debt and Proxy Forms should be lodged with this office prior to the meeting. These forms may be lodged via facsimile on (03) , however in accordance with Corporations Regulation A the original signed copy of the Proxy Form should be lodged with my office within 72 hours of lodging the faxed copy. Should creditors wish to update their contact details on my files, please complete the attached Request for Creditor Contact Details Form and return it to my office. Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, together with its subsidiaries and related entities, delivers its services independently in Australia. Liability limited by a scheme approved under Professional Standards Legislation. Our Ref: 36_First meeting circular

2 2 Alternatively if creditors have any questions and/or issues they wish me to address at the meeting of creditors, I request they complete the attached Question Sheet and return it to my office prior to the meeting to enable me to prepare a detailed response. Copies of this Circular to Creditors including the Notice of Meeting, Proof of Debt, Proxy Form and First Report to Creditors can also be downloaded from via the Creditors Info link. The minutes of the First Meeting of Creditors will also be available from the website approximately 14 days after the meeting. As a result of my appointment all claims by creditors against the Company are stayed whilst the Company is under Voluntary Administration. Accordingly, no proceedings against the Company or its property can be commenced or proceeded with during the moratorium period. This moratorium period will last until the Second Meeting of Creditors when a decision is made as to the Company s future. This meeting will be held within 25 business days of my appointment and you shall receive a written notice of the time and place of the meeting along with a report outlining the Company s business, property, affairs and financial circumstances in approximately 20 business days time unless an extension is granted to the convening period by the court. Should you have any queries in relation to the above, please do not hesitate to contact Mr Edwin Clark on Yours faithfully M J Byrnes ADMINISTRATOR Encl.

3 FORM 529A Corporations Act Subregulation (2)(a) A.C.N.: NOTICE OF FIRST MEETING OF CREDITORS OF COMPANY UNDER ADMINISTRATION PRECISION REINFORCEMENTS PTY LTD ( THE COMPANY ) (ADMINISTRATORS APPOINTED) 1. Notice is hereby given that on Wednesday, 23 February 2011 the Company appointed Matthew James Byrnes and Andrew Stewart Reed Hewitt as Administrators of the Company pursuant to section 436A(1) of the Corporations Act. 2. Notice is now given that a meeting of the creditors of the Company will be held at Grant Thornton, Level 2, 215 Spring Street, Melbourne, Victoria on Friday, 4 March 2011 at 10:00am. 3. The purpose of the meeting is to determine: (a) (b) whether to appoint a committee of creditors; and if so, who are to be the committee's members. 4. At the meeting, creditors may also, by resolution: (a) (b) remove the Administrators from office; and appoint someone else as Administrators of the Company. Dated this 25th day of February 2011 MATTHEW JAMES BYRNES ADMINISTRATOR

4 PROOF OF DEBT FOR THE PURPOSE OF VOTING AT A MEETING OF CREDITORS IN A VOLUNTARY ADMINISTRATION PRECISION REINFORCEMENTS PTY LTD (ADMINISTRATORS APPOINTED) NAME OF CREDITOR: AMOUNT OF DEBT CLAIMED (SEE NOTE 1): PERIOD OVER WHICH DEBT INCURRED: WHETHER DEBT SECURED OR UNSECURED: if secured, give details of security including dates (SEE NOTE 2). Signature of creditor (SEE NOTE 3). Name of signatory: Telephone number: NOTE 1 A creditor may not vote on any contingent debt, an unliquidated claim or a debt the value of which is not ascertained unless a just estimate of its value has been made. NOTE 2 A secured creditor who votes in favour of a Deed of Company Arrangement may affect its right to act under that security. Legal advice should be sought if you are unsure in this regard. NOTE 3 This Proof should be signed by a creditor or a person in the employ of the creditor duly authorised by that creditor to sign. If a creditor is a company, it should be signed by a person authorised under the Seal of the Company, to make a Proof of Debt on its behalf. The Chairman of the Meeting may admit or reject a Proof of Debt for the purpose of voting at the meeting.

5 FORM 532 Corporations Act Regulation A.C.N.: A P P O I N T M E N T O F P R O X Y PRECISION REINFORCEMENTS PTY LTD (ADMINISTRATORS APPOINTED) I/We (Note 1) (name of creditor) Of address of creditor) A creditor of PRECISION REINFORCEMENTS PTY LTD (Administrators Appointed) hereby appoint (name of proxy)(note 2) Of (address of proxy Or in his absence, (name of alternative proxy) Of (address of alternative proxy) As my/our special/general (Note 3) proxy to vote at the concurrent meeting of creditors to be held in the above matter on Friday, 4 March 2011 or at any adjournment thereof. If special proxy please select ONE of the following: 1 To vote on all matters arising from the meeting AND/OR ALTERNATIVELY 2 To vote specifically in the following manner: FOR AGAINST ABSTAIN (a) That a Committee of Creditors be appointed (b) That the Administrators be replaced DATED this day of 2011 Signature (Note 4) CERTIFICATE OF WITNESS (NOTE 5) I, of, certify that the above instrument appointing a proxy was completed by me in the presence of and at the request of the person appointing the proxy and read to him before he attached his signature or mark to the instrument. DATED this day of 2011 Signature of Witness Description Place of Residence NOTE: 1. If a firm, strike our I and set out the full name of the firm. 2. Insert the name, address and description of the person appointed. 3. If a special proxy add the words to vote for or the words to vote against and specify the particular resolution. 4. The signature of the creditor, contributory, debenture holder or member must not be attested by the person nominated as proxy. 5. This certificate is to be completed only where the person giving the proxy is blind or incapable of writing.

6 PRECISION REINFORCEMENTS PTY LTD (ADMINISTRATORS APPOINTED) QUESTIONS TO BE RAISED AT THE FIRST MEETING OF CREDITORS TO: Matthew Byrnes FAX NO: (03) FROM: CREDITOR NAME: QUESTIONS

7 PRECISION REINFORCEMENTS PTY LTD (ADMINISTRATORS APPOINTED) REQUEST FOR CREDITOR CONTACT DETAILS Should creditors wish to update their details on the Administrators s files, please complete the following and fax to (03) , or send to PRECISION REINFORCEMENTS PTY LTD (Administrators Appointed), C/- Grant Thornton, Level 2, 215 Spring Street, Melbourne VIC CREDITOR NAME: TRADING OR BUSINESS NAME: A.C.N. NUMBER: A.B.N. NUMBER: ADDRESS: POSTAL ADDRESS: CONTACT NAME: TELEPHONE: FAX

8 Insolvency information for directors, employees, creditors and shareholders ASIC has 11 insolvency information sheets to assist you if you re affected by a company s insolvency and have little or no knowledge of what s involved. These plain language information sheets give directors, employees, creditors and shareholders a basic understanding of the three most common company insolvency procedures liquidation, voluntary administration and receivership. There is an information sheet on the independence of external administrators and one that explains the process for approving the fees of external administrators. A glossary of commonly used insolvency terms is also provided. The Insolvency Practitioners Association (IPA), the leading professional organisation in Australia for insolvency practitioners, endorses these publications and encourages its members to make their availability known to affected people. List of information sheets INFO 41 Insolvency: a glossary of terms INFO 74 Voluntary administration: a guide for creditors INFO 75 Voluntary administration: a guide for employees INFO 45 Liquidation: a guide for creditors INFO 46 Liquidation: a guide for employees INFO 54 Receivership: a guide for creditors INFO 55 Receivership: a guide for employees INFO 43 Insolvency: a guide for shareholders INFO 42 Insolvency: a guide for directors INFO 84 Independence of external administrators: a guide for creditors INFO 85 Approving fees: a guide for creditors Getting copies of the information sheets To get copies of the information sheets, visit ASIC s website at The information sheets are also available from the IPA website at The IPA website also contains the IPA s Code of Professional Practice for Insolvency Professionals, which applies to IPA members. Important note: The information sheets contain a summary of basic information on the topic. It is not a substitute for legal advice. Some provisions of the law referred to may have important exceptions or qualifications. These documents may not contain all of the information about the law or the exceptions and qualifications that are relevant to your circumstances. You will need a qualified professional adviser to take into account your particular circumstances and to tell you how the law applies to you. Australian Securities & Investments Commission, December 2008 Page 1 of 1

9 DECLARATION OF INDEPENDENCE, RELEVANT RELATIONSHIPS AND INDEMNITIES PRECISION REINFORCEMENTS PTY LTD (ADMINISTRATORS APPOINTED) ( THE COMPANY ) This document requires the Practitioners appointed to an insolvent entity to make declarations as to: A. their independence generally; B. relationships, including 1. the circumstances of the appointment; 2. any relationships with the Insolvent and others within the previous 24 months; 3. any prior professional services for the Insolvent within the previous 24 months; 4. that there are no other relationships to declare; and C. any indemnities given or up-front payments made, to the Practitioner. This declaration is made in respect of ourselves, the appointed administrators, our partners and Grant Thornton Australia Limited ( GTAL ). A. Independence We, Matthew James Byrnes and Andrew Stewart Reed Hewitt of GTAL have undertaken a proper assessment of the risks to our independence prior to accepting the appointment as Joint and Several Administrators of the Company 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 this appointment. B. Declaration of Relationships i. Circumstances of appointment We first met with director of the Company, Mr Michael Leslie, and his financial adviser on Tuesday, 22 February During this meeting the following issues were discussed: The Company s current financial situation; and To explain to the director the various options available to the Company and the nature and consequences of an insolvency appointment. A consent to act was subsequently provided on 23 February 2011 prior to our appointment of administrators. We did not receive any remuneration for this advice. These meetings do not affect our independence for the following reasons: The Courts and the IPA s Code of Professional Practice specifically recognise the need for practitioners to provide advice on the insolvency process and the options available and do not consider that such advice results in a conflict or is an impediment to accepting the appointment; The nature of the advice provided to the Company is such that it would not be subject to review and challenge during the course of the voluntary administration/liquidation; and The pre-appointment advice will not influence our ability to be able to fully comply with the statutory and fiduciary obligations associated with the voluntary administration/liquidation of the Company in an objective and impartial manner ii. Relevant Relationships (excluding Professional Services to the Company) Neither we, nor our firm, have, or have had within the preceding 24 months, any relationships with the Company, an associate of the Company, or a former insolvency practitioner appointed to the Company. We, or our firm, have, or have had within the preceding 24 months, a relationship with a person or entity that has a charge on the whole or substantially whole of the Company s property as summarised in the table below:

10 Name Nature of relationship Reasons why not a Impediment or Conflict Scottish Pacific Business Finance Pty Limited ( SPBF ) As with a number of financiers, the administrators are known to SPBF and on occasion have been engaged by SPBF in formal and informal roles unrelated to the current appointment. Neither the administrators nor GTAL have ever undertaken any work for SPBF in respect of the Company. The work that we or GTAL undertakes for SPBF will not influence our ability to be able to fully comply with the statutory and fiduciary obligations associated with the Voluntary Administration/liquidation of the Company in an objective and impartial manner. Referrer of the appointment (Accountant, Lawyer, Creditor, Other Practitioner) Please refer to Appendix A iii. Prior Professional services to the Company Neither we, nor our firm, have provided any professional services to the Company in the previous 24 months. iv. 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 Company, an associate of the Company, a former insolvency practitioner appointed to the Company or any person or entity that has a charge on the whole or substantially whole of the Company s property that should be disclosed. Indemnities and up-front payments We have been provided with the following indemnities for the conduct of this administration: Name Relationship with the Company Nature of Indemnities and upfront payments Scottish Pacific Business Finance Pty Limited ( SPBF ) Financer As the administrators are without funds or assets in the administration, SPBF have provided a limited indemnity to cover remuneration up to an agreed cap of $100,000 and expenses associated with the administration. There are no conditions on the conduct or outcome of the administration attached to the provision of these funds. This does not include statutory indemnities. We have not received any other indemnities or upfront payments that should be disclosed.

11 Dated: this 25 th day of February Matthew James Byrnes Andrew Stewart Reed Hewitt NOTE: If circumstances change, or new information is identified, I am/we are required under the Corporations Act and the IPA Code of Professional Practice to update this Declaration and provide a copy to creditors with my/our next communication as well as table a copy of any replacement declaration at the next meeting of the insolvent s creditors. 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.

12 Appendix A Referrals from other Professionals and Creditors Practitioners may accept a series of appointments from individual creditors, lawyers, accountants or from another Practitioner. However, Practitioners must always have regard to how an ongoing relationship may affect their independence or the perception of independence. Networks of referrals between professionals are normal and are acceptable provided the referral and relationship are based on the quality of professional service and expertise. This would invariably have been identified through prior experience. A Practitioner must not accept an appointment if the Practitioner would not be independent in fact, or would not be perceived to be independent. Regard must be had to this when considering whether to accept the referral of an appointment. A Practitioner must not accept any referral that contains, or is conditional upon: referral commissions, inducements or benefits; spotter s fees ; recurring commissions; understandings or requirements that work in the Administration will be given to the referrer; or any other such arrangements that restrict the proper exercise of the Practitioner s judgment and duties. Panel arrangements, ie where a Practitioner is on a panel of practitioners maintained by a creditor for selection for appointment, will not in itself result in a lack of independence, but may need to be included in the DIRRI (for example, disclosure of relationships with secured creditors with security over the whole or substantially the whole of the Insolvent s assets). Examples A Practitioner may undertake work from time to time on behalf of a major bank. A Practitioner may be on a panel of practitioners for a major creditor such as the Australian Taxation Office. The larger the number, size or significance of Appointments referred from a particular source, the greater the likelihood that the Appointment will result in a perceived lack of independence of the Practitioner. Examples Regular referrals from a director in relation to a number of her companies may be more likely to result in a perceived lack of independence than regular referrals from a law firm. A larger number of referrals from one source could result in a perception that the Practitioner has become dependent on the workflow and thus is no longer independent. Action items Please answer the following questions after consideration of the above. Question Y/N Action Is the referral conditional on the points raised N If yes, appointment cannot be accepted. above? Is there a threat to the appointee s independence? N If yes, consider/implement strategies to remove threat or alternatively do not accept the appointment. Is there a threat to the appointee s perceived independence? N If yes, consider/implement strategies to mitigate perception or alternatively do not accept the appointment. Is the relationship already disclosed (eg secured creditor)? Y If not, insert details in the table under section B(ii) Relevant Relationships (excluding Profession Services to the Company).

13 Charge Rates (excluding GST) Classification Charge Rate Guide to Level of Insolvency Experience PARTNER/DIRECTOR $575 Registered Liquidator/Trustee. Partner/Director bringing specialist skills to Administrations and Insolvency matters. Controlling all matters relating to the assignment. PARTNER/DIRECTOR $485 Registered Trustee. Partner/Director bringing specialist skills to Administrations and Insolvency matters. Controlling all matters relating to the assignment. ASSOCIATE DIRECTOR $475 Qualified accountant (CA/CPA). 8+ years experience. Well developed technical and commercial skills. Planning and control of all Administration and Insolvency tasks. Controlling substantial matters relating to the assignment and reporting to the appointee. MANAGER $430 Typically CA/CPA Qualified. 6-8 years experience. Well developed technical and commercial skills. Planning and control of Administration and Insolvency tasks with the assistance of the appointee. MANAGER $400 Typically CA/CPA Qualified. 6-8 years experience. Well developed technical and commercial skills. Planning and control of Administration and Insolvency tasks with the assistance of the appointee. ASSISTANT MANAGER $365 Typically CA/CPA Qualified. 4+ years experience. Co-ordinates planning and control of small to medium Administrations and Insolvency tasks. Conducts certain aspects of larger administrations. SENIOR 1 $320 Typically CA/CPA Qualified. 3-5 years experience. Required to control the fieldwork on Administrations and Insolvency tasks. SENIOR 1 $280 Typically CA/CPA Qualified. 3-5 years experience. Required to control the fieldwork on Personal Insolvency tasks. SENIOR 2 $295 Typically undertaking CA/CPA Qualification or recently Qualified. 2-4 years experience. Required to conduct the fieldwork on Administrations and Insolvency tasks. ACCOUNTANT 1 $270 Typically undertaking CA/CPA Qualification. Up to 3 years experience. Required to conduct the fieldwork on smaller Administrations and Insolvency tasks and assist with fieldwork on medium to large Administrations and Insolvency tasks. ACCOUNTANT 2 $250 Commencing CA/CPA Qualification. Up to 2 years experience. Required to assist with the day to day fieldwork on smaller Administrations and Insolvency tasks under the supervision of more senior staff. GRADUATE $225 Typically 6-15 months experience. Required to assist with the day to day fieldwork on Administrations and Insolvency tasks under the supervision of intermediate and senior staff. GRADUATE $190 Typically first 6 months experience. Required to assist with the day to day fieldwork on Administrations and Insolvency tasks under the supervision of intermediate and senior staff. ADMINISTRATOR $190 Conducts all aspects relating to administering the accounts function. PA/SECRETARY $165 Carries out all secretarial functions relating to an administration. UNDERGRADUATE $160 Typically in final year of tertiary studies and undergoing vacation employment or part time work. Notes: 1. This guide to the level of insolvency experience is intended only to be a guide as to the qualifications and experience of the staff engaged. It should be noted that in some instances staff may be engaged under an appropriate classification principally due to their experience. 2. Time spent on matters is recorded and charged in six (6) minute intervals. 3. Charge rates shown are per hour and excluding GST.

14 Administrators First Report to Creditors Precision Reinforcements Pty Ltd (Administrators Appointed) 25 February 2011

15 Precision Reinforcements Pty Ltd (Administrators Appointed) 1 Contents Page 1 Introduction 2 2 General Information 4 3 Company Creditors 7 4 Company Assets 9 5 Other Matters 10 6 First Meeting of Creditors 11 7 The Administration Process 12 8 Question Sheet 13

16 Precision Reinforcements Pty Ltd (Administrators Appointed) 2 1 Introduction I advise that on 23 February 2011, Andrew Hewitt and I were appointed as Voluntary Administrators of Precision Reinforcements Pty Ltd ( the Company ) pursuant to Section 436A(1) of the Corporations Act. Although we were appointed by the Company s Director, which is the mechanism for the majority of such appointments, our role is to ensure that the Company s affairs are properly conducted and the interests of all creditors and employees are served. The ongoing limited trading of the business is discussed further in the report. Customers and account holders should note that there may be small changes to how they dealt with the business previously however should there be any concerns my staff will available to discuss any matters. A meeting for the creditors of the Company will be held at our offices, Level 2, 215 Spring Street, Melbourne on Friday, 4 March 2011 at 10.00am. At this meeting I will provide a preliminary outline of the conduct of the administration and there will be an opportunity for creditors to ask questions. A notice of this meeting is attached to this report. All creditors of the Company are able to attend this meeting and are encouraged to do so. As this report has been prepared and posted shortly after the appointment, it is brief and indicative only. Further information and clarification will be provided at the upcoming meeting of creditors and a more detailed report to creditors will be issued prior to a second meeting of creditors in approximately four weeks time.

17 Precision Reinforcements Pty Ltd (Administrators Appointed) STATEMENT OF INDEPENDENCE The following is a summary of Declaration of Independence, Relavent Relationships and Indemnities. A full Declaration of Independence, Relevant Relationships and Indemnities is available in the creditors circular which is attached. A. Independence We, Matthew James Byrnes and Andrew Stewart Reed Hewitt of Grant Thornton Australia Limited ( GTAL ) have undertaken a proper assessment of the risks to our independence prior to accepting the appointment as Joint and Several Administrators of the Company 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 this appointment. B. Declaration of Relationships i. Circumstances of appointment We first met with director of the Company, Mr Michael Leslie, and his financial adviser on Tuesday, 22 February During this meeting the following issues were discussed: The Company s current financial situation; and To explain to the director the various options available to the Company and the nature and consequences of an insolvency appointment. A consent to act was subsequently provided on 23 February 2011 prior to our appointment of administrators. We did not receive any remuneration for this advice. These meetings do not affect our independence for the following reasons: The Courts and the IPA s Code of Professional Practice specifically recognise the need for practitioners to provide advice on the insolvency process and the options available and do not consider that such advice results in a conflict or is an impediment to accepting the appointment; The nature of the advice provided to the Company is such that it would not be subject to review and challenge during the course of the voluntary administration/liquidation; and The pre-appointment advice will not influence our ability to be able to fully comply with the statutory and fiduciary obligations associated with the voluntary administration/liquidation of the Company in an objective and impartial manner ii. Relevant Relationships (excluding Professional Services to the Company) Neither we, nor our firm, have, or have had within the preceding 24 months, any relationships with the Company, an associate of the Company, or a former insolvency practitioner appointed to the Company.

18 Precision Reinforcements Pty Ltd (Administrators Appointed) 4 2 General Information 2.1 BACKGROUND Precision Reinforcements Pty Ltd was first established in June 2004 and provided steel reinforcement services primarily to Companies specialising in precast concrete. The Company had 102 employees working on-site across various locations throughout Victoria upon appointment. Subject to the continued support of the Company s financier, who has agreed to provide the administrators with limited funding, it is the intention of the Administrators to continue to provide some of the Company s services in respect to certain projects, albeit in a limited capacity, for approximately the next four week period. As a consequence, some employees will continue to work for approximately four weeks on certain projects, while a number of employees will have their employment with the Company terminated effective immediately. More information is provided in Section 4.3 of this report. 2.2 OFFICERS OF THE COMPANY A search of the Australian Securities and Investment Commission s database confirmed that the sole director of the Company is Mr Michael Leslie. The Company has twelve (12) issued and paid up $1 shares all of which are issued to Mr Leslie. There have been no recent changes to the Company s officers.

19 Precision Reinforcements Pty Ltd (Administrators Appointed) CIRCUMSTANCES LEADING TO THE APPOINTMENT We understand the Director had been seeking advice from his accountants about the Company s financial position in the weeks preceding our appointment. The Company had experienced some financial difficulties and had a number of outstanding liabilities, including statutory obligations. We understand the Director had been in contact with his WorkCover insurer in the weeks leading up to appointment regarding unpaid premiums. On 22 February 2011, the Director was advised the Company s policy would be cancelled immediately, effectively leaving the Company without WorkCover insurance. This left the Director in a position where he could be personally liable for any workplace incidents, and this in turn led to the appointment of Andrew Hewitt and myself on 23 February 2011 as Administrators. Further investigation into the reasons for the failure of the Company will be conducted over the coming weeks and reported in detail to creditors in our next report.

20 Precision Reinforcements Pty Ltd (Administrators Appointed) 6 3 Trading During the Administration We confirm, subject to the continued support of the Company s financier, who has agreed to provide the administrators with limited funding, it is the intention of the Administrators to continue to provide some of the Company s services in respect to certain projects, albeit in a limited capacity, for approximately the next four week period. Employees have been advised individually regarding the status of their ongoing employment over this period.

21 Precision Reinforcements Pty Ltd (Administrators Appointed) 7 4 Company Creditors 4.1 SECURED CREDITORS A search of the ASIC company database revealed that the Company had one (1) secured creditor, Scottish Pacific Business Finance Pty Limited ( Scottish Pacific or the Financier ). The Financier provided the Company with debtor finance, and the facility provided by the Financier is discussed in further detail in Section 5.2 of this report. 4.2 LESSORS We understand the Company has leased three (3) vehicles through Bendigo and Adelaide Bank Limited. We have contacted the Bank to advise of our appointment and it is our intention to disclaim interest in all three vehicles. 4.3 EMPLOYEES Upon appointment, the Company employed a total of 102 full time staff working on-site across various locations in Victoria. In conjunction with the union (CFMEU), we met with the employees at the two main sites on 24 February 2011 and explained the purpose of the Administration. The support of the employees is critical to the ability of the Company to continue to trade and we appreciate the understanding of the employees and the assistance provided by the union to date. We are working closely with the union to quantify the outstanding pre appointment entitlements. Once these entitlements are confirmed, we will write to all employees providing details of their outstanding entitlements as at the date of our appointment.

22 Precision Reinforcements Pty Ltd (Administrators Appointed) UNSECURED CREDITORS The Company s total known unsecured creditors at the time of writing amount to approximately $2.9 million, as shown below: The Company s known unsecured creditors primarily consist of statutory and employee claims as shown below: Name Amount ($ 000s) Australian Taxation Office 2,106 IncoLink 245 CBus 230 State Revenue Office 146 Workers Compensation 86 Co Invest 80 Employee entitlements TBC Other creditors 81 Total 2,974 This information was taken from the Company s records at the time of our appointment, and is likely to change once additional invoices are posted and adjustments made. Creditors should also note that the employee entitlements are currently being reviewed in reference to the relevant instruments of employment and we hope to provide a more accurate estimate to each employee shortly, and to creditors generally in my next report. Certain creditors may have contingent claims which have not yet crystallised. Further, there may be additional creditors not identified at the date of my report. For these reasons, we expect the amounts owing to unsecured creditors will increase.

23 Precision Reinforcements Pty Ltd (Administrators Appointed) 9 5 Company Assets 5.1 CASH AT BANK The Company holds two trading accounts with Bendigo and Adelaide Bank. Our initial investigations indicate the net balance of these accounts upon appointment is negative c.$171k (i.e. overdraft). 5.2 DEBTORS At the date of appointment, the Company s debtor ledger lists c. $1.9 million as owing. We have not formed a view on the collectability of the debtors at this stage. It is also important to note that the book debts have been assigned to the financer who also hold a first ranking security over debtors for the amounts they have previously advanced to the Company in respect of their facility. We understand the majority of the ledger relates to a few key customers and we will be working closely with these parties in the coming weeks to maintain collection. A further assessment of the collectability of the debtors ledger will be assessed in due course, and an update will be provided in the second report to creditors. 5.3 STOCK The Company does not hold any stock or inventory. 5.4 PLANT & EQUIPMENT The Company does not own any plant and equipment.

24 Precision Reinforcements Pty Ltd (Administrators Appointed) 10 6 Other Matters 6.1 INSURANCE I confirm that effective from Wednesday, 23 February 2011, automatic cover has been initiated over all of the Company s assets (including its staff) so as to protect the interests of creditors. I received confirmation on 24 February 2011 that the appropriate insurance policy is in place covering WorkCover and other coverage as required. 6.3 STATUTORY OBLIGATIONS In addition to this notice, I have notified the Australian Taxation Office, State Revenue Office, the relevant worker s compensation authority and the Sheriff of my appointment. I have also lodged the appropriate documentation with the Australian Securities and Investments Commission (ASIC) regarding my appointment and advertised both the appointment and the first meeting of creditors in The Age newspaper. 6.4 REPORT AS TO AFFAIRS I advise that following my appointment, I served on the directors a Report as to Affairs ( RATA ) and Questionnaire for Directors and Officers, which is to be completed and returned to me for my review within seven (7) days thereof. The RATA will detail the Company s assets and liabilities position as at Wednesday, 23 February I expect to comment further on this report following its receipt in my report to creditors pursuant to Section 439A of the Corporations Act when convening the second meeting of creditors of the Company in approximately 28 days hereof.

25 Precision Reinforcements Pty Ltd (Administrators Appointed) 11 7 First Meeting of Creditors The First Meeting of Creditors will be held at 10:00am at the offices of Grant Thornton Australia Limited, Level 2, 215 Spring Street, Melbourne, Victoria on Friday, 4 March Please complete the attached Proof of Debt and Proxy Form and return them to my office in accordance with the directions outlined in the attached Circular to Creditors. If you are unable to attend, you may nominate myself as Chairman or another person in attendance to act as your proxy and vote on your behalf at the meeting. I encourage all creditors to attend the meeting so as they may be fully briefed on the status of the Voluntary Administration. However, should you be unable to attend, the minutes of the meeting will be available on our website within 14 days at and then by following the links to Creditors Info and then Melbourne. Otherwise, please feel free to contact our office in the meantime.

26 Precision Reinforcements Pty Ltd (Administrators Appointed) 12 8 The Administration Process I advise that following the First Meeting of Creditors I shall conduct investigations into the circumstances leading to the appointment of the Administrators. I encourage creditors to bring to my attention any matters which they wish to have investigated and any such request should be forwarded to my office in writing. The results of these investigations, information about the Company s business, property, affairs and financial circumstances shall be forwarded to you approximately 28 days after my appointment in accordance with the provisions of Section 439A(4) of the Corporations Act. This report will also outline the options available to creditors in determining the outcome of the Voluntary Administration at the Second Meeting of Creditors to be held approximately 28 days after my appointment. The options available under the Corporations Act to creditors in deciding the Company s future are: The Company execute a Deed of Company Arrangement; or The Voluntary Administration and the Company is returned to the control of its directors; or The Company is wound up. The report will also contain my recommendations as to which of the above options I believe to be in the best interest of the creditors.

27 Precision Reinforcements Pty Ltd (Administrators Appointed) 13 9 Question Sheet Please refer to the question sheet attached to the Notice to Creditors, which has been provided to you so that you may forward to me prior to the meeting any queries you may have in relation to the Company s affairs or the Voluntary Administration process in general. This will allow me an opportunity to access the relevant information and prepare a detailed response at the First Meeting of Creditors. I will also be taking questions from the floor at the meeting. Should you wish to send in your questions via facsimile please do so on (03) This concludes my First Report to Creditors. Should creditors have any further queries on the contents of this report or any other matter relating to the Company s affairs, please do not hesitate to contact Edwin Clark on (03) M J BYRNES ADMINISTRATOR