More than 2,000 jobs have been axed and dozens of government construction projects could be paused as ISG, one of the UK’s largest contractors, fell into administration.
In the biggest collapse of a UK construction company since Carillion, administrators EY confirmed on Friday that ISG had ceased trading with immediate effect, with the closure of all of its sites.
It confirmed that most of the 2,400 people it employed in the UK would be made redundant with immediate effect, with only 200 staff retained to assist administrators.
ISG is involved in 69 live central government schemes, including several projects as part of the Ministry of Justice’s plan to increase the capacity in Britain’s prisons by an extra 20,000 spaces. It is also working on schemes for the Department for Work and Pensions and several school building projects.
The Cabinet Office said it had implemented “detailed contingency plans” and departments were working to ensure sites were safe and secure.
ISG is the sixth biggest construction contractor in the UK by turnover, with revenues of £2.2bn. In 2018, Carillion, the UK’s second-biggest contractor, collapsed owing suppliers £7bn.
EY said it had been appointed as administrator to ISG’s eight trading titles, and ISG’s full UK construction services had ceased to trade with immediate effect.
It said the UK business had experienced significant liquidity constraints in recent months and because of market conditions a sale or additional funding could not be secured.
In an email to staff on Thursday, first reported by Construction Enquirer, ISG chief executive, Zoe Price, apologised and said the group’s cashflow was affected by large lossmaking contracts secured between 2018 and 2020.
She added: “Trading out these projects has had a significant effect on our liquidity. So even though we have been profitable this year, our legacy has led us to a point where we have been unable to continue trading.”
As well as the closure of its offices and construction sites, subcontractors have been stood down from their work.
Data from the construction analyst Barbour ABI has estimated that ISG is involved in live government construction projects worth £1.8bn. These include 22 live projects with the Ministry of Justice, including a number of prison schemes such as the £300m extension to Spring Hill, in Buckinghamshire.
This comes only weeks after the government let out 1,700 offenders early to ease overcrowding.
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ISG also has contracts with high-profile private clients such as Apple, Google and Barclays.
There were reports earlier this year that the company was facing cashflow problems, and the chief executive, Matt Blowers, and the finance director, Karen Booth, left the company in February and March respectively.
In July, it reported that it had found a potential buyer, with the investment firm Antipodean Holdings in discussions over a takeover.
Antipodean Holdings said in a statement on Friday that it was ready to strike a deal to secure jobs and was committed to a deal until ISG stopped communicating with it on 12 September.
Addressing this, the administrators said: “We wish to be clear to employees, suppliers, and customers that it was not possible to conclude a sale as the potential purchaser could not, despite repeated requests of them to do so, adequately demonstrate that they had the funding needed to recapitalise the business and keep it solvent.”
It added that directors also looked at refinancing the company but were unable to complete this.
Source: theguardian.com
