Forrest enters administration
After weeks of speculation and a failed attempt to secure a refinancing deal, administrators have been called in at Bolton-based contractor Forrest.
Administrators at FRP Advisory have been appointed at the company, which employs around 230 people, roughly a month after it was first forced to deny rumours it was on the brink of collapse.
Three problem jobs – Citu NQ in Manchester’s Northern Quarter, and X1 The Gateway and X1 The Plaza – have been the root of the company’s financial woes.
Last week, the company confirmed it was looking to sell its energy and regeneration arms in a bid to stay afloat after talks with banks and lenders over a refinancing deal collapsed.
Some of the company’s regeneration contracts have been sold to Engie, saving 64 jobs, but the construction and housing divisions of the company will now be wound down.
Joint administrator Anthony Collier said: “Despite the best efforts of the directors, the legacy issues facing the company have been unable to be resolved, resulting in an unsustainable financial situation.
“We have successfully agreed a sale of certain contracts to Engie Regeneration Limited, which will preserve 64 jobs and provide continuity for customers in the refurbishment and energy divisions
“Unfortunately, it has not been possible to secure a sale for the construction and housing elements of the company, and we are working with all stakeholders to deal with the orderly wind-down of these divisions.
“We are pleased that during this process, working alongside management, we have assisted a large number of employees find alternative employment within the industry and will continue to work closely with agencies, including the Redundancy Payments Service, to ensure that employees receive every support at this difficult time.”
The group struggled to recover after admitting it had made “a series of incorrect pre-construction estimates” on some of its projects; industry sources told Place North West one of the contractor’s major jobs had been heavily under-costed by around £5m despite months of negotiations, while on another scheme, subcontractor packages had been “wildly under-estimated” making certain parts of the project “unprofitable”.
It is understood Forrest had attempted to renegotiate a number of jobs in the last month but these efforts were largely unsuccessful.
The contractor was replaced over the past two weeks on many of its major projects as it looked to stay afloat. These include the £100m Aura scheme in Liverpool for Elliot Group, where it was yesterday replaced by Vermont; the developer replaced Forrest on another of its projects, the £70m, 34-storey The Residence in Salford. Careys has been drafted in on this site to deliver the concrete frame while the developer looks to appoint a permanent main contractor replacement.
Developer Salboy also acted quickly to replace Forrest on the contractor’s loss-making Citu NQ job in Manchester following administration rumours last month, drafting in Domis, the company founded by former Forrest boss Lee McCarren, to complete the project.
Other projects the contractor was delivering included Plaza 1821 on Liverpool Waters for developer Peel, in a project designed by Hodder + Partners. Work on this scheme stopped last month after concrete frame contractor Heyrod walked away from the project following payment disputes.
Last year, Forrest made 30 staff redundant in a restructuring move after unearthing a pre-tax loss of £26m, which it said was down to accounting “errors”.
The company had previously reported a pre-tax profit of £3.6m in 2015 but this was revised heavily downwards to a pre-tax loss of £19.2m. This was followed by a £6.8m loss for the year to 29 February 2016.
Following this, the Greater Manchester Combined Authority agreed to step in with a £2m finance package to keep the contractor afloat. The GMCA was a new lender to the group replacing the Royal Bank of Scotland. At the time, Palatine Private Equity remained as majority shareholder, alongside Lloyds Development Capital.
Mark Nicholson, Carillion’s former managing director of building for the North, Midlands, South West, and Scotland, took over as chief executive in September 2017, following the exit of McCarren.
The company’s former finance director, Matthew Farrimond, was also jailed this summer for siphoning off nearly £370,000 from the company during his time in charge.
Nicholson and Forrest financial director Keith Reid have already established two new companies at Companies House: Forrest Services, and Forrest Construct.
Troubles at the contractor have already hit the supply chain with M&E company Proline forced to call in Cowgill Holloway in a bid to keep trading after being hit by cash flow problems following Forrest’s troubles.