ISG’s potential saviour did not have enough money to buy the business, the firm’s administrator has revealed.
EY has been confirmed as administrator of the £2.2bn contractor which collapsed yesterday 11 weeks after announcing an imminent sale to a South African businessman.
But in a statement published this afternoon, EY said the sale had fallen through as the prospective buyer could not “adequately demonstrate” that they had the funding needed to keep the business solvent.
This was despite “repeated requests” for the buyer to confirm that they had the money to hand, EY added.
And in a call with staff this afternoon, ISG chief executive Zoe Price said the deal had failed because the buyer could not show that the funding was “really there”.
She said: “The reason a sale of ISG was unable to complete was not about a price for ISG or the amount of recapitalisation needed, it was that the buyer was unable to demonstrate that the financing was in place.
“Despite continual engagement and commitment from us all here, the party in question could not show that the funding was really there.”
Price added: “For those of you that know me, and how passionate and committed I am to ISG, you will know that if there was a way of proceeding with a sale of ISG safely, we would have done it.”
All of ISG’s operations in the UK have now ceased trading with immediate effect, consisting of eight entities including the group’s £568m turnover fit out arm, by far its most profitable business.
Around 2,200 jobs have been axed “with immediate effect”, with approximately 200 staff to be temporarily retained to assist administrators in winding down the business.
EY blamed “liquidity constraints in recent months” for the demise of the firm, the biggest collapse in the construction industry since Carillion six years ago.
It said directors had 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.
But an alternative sale or additional funding could not be secured “due to market conditions”, resulting in ISG directors making an application to the court to place the firm’s UK entities into administration.
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“Despite significant efforts to secure a sale of the group over many months, a deal could not be completed,” the statement said.
“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.”
Meanwhile, the Construction Leadership Council (CLC) has offered “support and guidance” to individuals and organisations impacted by ISG’s collapse.
In an emergency meeting with trade bodies, skills providers and the Department for Business and Trade to discuss how to respond to ISG’s collapse, the CLC said it was aiming to ensure the fallout on the wider construction sector was limited “as far as possible”.