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In late November 3,400 staff were left in the lurch right before Christmas when RCR Tomlinson announced it had fallen into administration.
But with the dawning of a new year, RCR has found a partial saviour in the form of The Energy Group Limited (ASX: EGL) which will acquire the assets of RCR Energy Service.
For EGL, the acquisition makes perfect sense as it continues with its strategy to become a truly national player as it builds an environmental business to improve air quality, reduce carbon emissions, enhance waste to energy production and lift water quality.
"In particular, RCR is an essential link in our strategy to build a bio/waste to energy platform as part of the technology acquired enables a combination of gasses and waste energy sources to be used to produce electrical power or steam," says EGL.
"In addition, the acquisition provides an opportunity to leverage EGL's existing suite of products to RCR Energy Service customers and to develop increased engineering capabilities and knowhow."
At the request of RCR's administrators McGrathNicol the purchase price of RCR will be withheld until the end of January.
EGL expects to complete the acquisition of RCR Energy Service during the first half of January, with the existing management team of RCR retained at EGL.
The new parent will draw on the history of the RCR Energy Service division, and will operate the company as Tomlinson Energy Service.
RCR Energy Service develops boilers with state of the art technologies for renewable and conventional fuels.
RCR is one of Australia's oldest engineering and construction companies, having been established 120 years ago.
The administration of the company was as a result of the company being unable to secure additional and important funding.
EGL is optimistic about RCR, citing its strong financial results (generating sales of $21.5 million in FY18 and earnings of $1.5 million in FY18).
The senior management team of RCR Energy Service has agreed to join EGL, providing important customer and supplier continuity.
When RCR fell into administration the company announced that it was facing a class action in the NSW Supreme Court from aggrieved shareholders just days previous.
The class action relates to a massive share price plunge in August which followed RCR's disclosure of operational issues from two solar farm projects in Northern Queensland.
When RCR's shares were reinstated for trading on 30 August 2018, the share price fell by more than 60%, from $2.80 to $1.05, wiping out hundreds of millions of dollars of shareholder value.
The two solar projects have been written down to the tune of $57 million and its contractors have withdrawn workers off the farms.
The class action alleges that RCR Tomlinson breached continuous disclosure laws because senior management were aware, or should have been aware, of problems at the solar plants.
Shares in EGL are steady at $0.035 per share at 12pm AEDT.
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