Australian state unwilling to bail out debt-ridden home builder Bathla
Bathla has more than A$3 billion (US$2.2 billion) in debt owed to dozens of private lenders
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[SYDNEY] An Australian state minister on Tuesday (Sep 8) said the government had no plans to bail out struggling home builder Bathla Group, as the debt-laden developer faces the prospect of liquidation with thousands of homes under construction in limbo.
Administrators last month assumed control of Bathla, one of the country’s most prolific affordable housing developers which operates in Sydney’s western suburbs, to manage more than A$3 billion (US$2.2 billion) in debt owed to dozens of private lenders.
The collapse has highlighted the risks of Australia’s booming A$200 billion private credit sector and threatens to complicate government housing construction targets to address a nationwide shortage of homes.
If Bathla is liquidated, it would represent one of the biggest corporate failures in Australia’s history.
Paul Scully, the planning minister for New South Wales, where Sydney is located, said the state was not in a position to rescue the company.
“I wouldn’t see it at this stage. We also don’t know how much we’re exposed to, and that’s part of the challenge because it’s so opaque in terms of some of the financing,” he told the Australian Financial Review Property Summit in Sydney.
“We’re not willing to write an open-ended cheque at this stage.”
Clare O’Neil, the federal housing minister, said the government was watching the situation closely.
“It’s a really significant incident, particularly in Sydney. This is a significant developer with a very complex and fragmented business structure,” she said.
Even so, a federal bailout was also “not something that’s being considered at the moment,” she said.
Bathla, founded in 1997, has 22,000 apartments and 3,500 homes under development, according to its website.
Administrators for the group stood down more than 200 staff on Monday while securing two weeks of funding from lenders to allow some construction projects to continue.
Bathla has yet to secure a longer-term funding deal, raising the prospect of liquidation that could put thousands of homes under construction at risk. REUTERS
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