Government contractor ISG files for administration
Construction giant ISG has gone into administration, it emerged on Friday, putting thousands of jobs at risk.
The firm, which is owned by US-based family office Cathexis, employs around 2,400 people in the UK. Its clients include the government as well as major private sector companies such as Apple and Barclays.
Government work includes the construction of prisons and police stations. According to Sky News, the Cabinet Office was closely monitoring the situation and was lining up City advisors to work on contingency plans for the business.
Neither the company nor the Cabinet Office have so far commented.
But in a widely-reported email to staff sent overnight on Thursday, chief executive Zoe Price confirmed the business had filed for administration in the UK and that both sites and offices would remain closed on Friday.
"Some of you may have seen reports in the media that ISG has filed for administration here in the UK," she told staff. "With sadness, I confirm that this is factually correct."
Price said that while the business was profitable this year, trading out large, loss-making legacy contracts had had a "significant effect" on liquidity.
She continued: "I want you to know there have been significant efforts made to secure a sale of the group over many months.
"While there has been speculation for some weeks now, I can confirm that it was not possible to conclude a sale, as the purchaser could not satisfy the funding need to recapitalise the business.
"Cathexis also looked at refinancing the company in recent months but has been unable to execute."
It is thought a South African investor had been close to buying the business.
EY said in a statement that it had been appointed joint administrator to eight UK trading entities of ISG, including ISG Central Services and ISG Interior Services, among others.
"ISG’s UK business has experienced liquidity constraints in recent months. The directors explored a number of options to secure the future of the business, including a sale of all or part of the group and refinancing options," it said.
"Despite significant efforts to secure a sale of the group over many months, a deal could not be completed. Whilst there has been misleading speculation surrounding the potential sale in the last few days, 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.
"Due to current market conditions, an alternative sale or additional funding could not be secured. As a result, the directors made an application to Court to place certain UK trading entities of ISG in administration."