Aura Site Excavation
Forrest is currently on site at Elliot Group's £100m Aura

Forrest denies administration rumours

Charlie Schouten

Bolton-based contractor Forrest, which is working on high-profile projects in Manchester and Liverpool, has denied rumours it is close to appointing administrators but has confirmed it is exploring a refinancing deal.

Industry sources told Place North West the contractor was in difficulty following reports in the Bolton News that the company was looking to refinance following a number of problem jobs.

It is understood Forrest’s directors met with the company’s banks last Friday to try and thrash out a refinancing deal, with sources claiming the company “has been in trouble for the last week or two”, while there are also claims that subcontractors have refused to go to sites unless they are paid on a pro-forma basis.

The group, which employs more than 400 people, is currently on-site at projects including Peel’s Plaza 1821 at Liverpool Waters; Elliot Group’s The Residence in Salford; and Citu NQ for Fred Done vehicle Salboy in Manchester’s Northern Quarter.

The latter scheme is understood to be one of the historic problem jobs that has hit the company, with sources suggesting Domis, the contractor set up by ex-Forrest boss Lee McCarren, is primed to take over should Forrest have to step away. The project is around one-third through with the steel frame currently built out. Other projects in the pipeline that are yet to start on site may also be in doubt, with the contractor also reportedly struggling to agree a price on the No1 Old Trafford residential scheme, which was initially agreed under Forrest’s former management.

The group’s finance director Keith Reid told the Bolton News the company was not in administration despite “a lot of rumours in the market”, but said the group was looking to refinance due to “a number of challenges on a number of projects”.

“The company is in the process of trying to secure a refinance deal and if we are unsuccessful there are a number of other viable options that we are working on.”

Other projects the company is working on include the £100m Aura development, also for Elliot Group, and X1 The Gateway in Salford Quays, a £28m, 20-storey apartment scheme.

Last year, the company 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.

Your Comments

Read our comments policy here

Interesting that they have registered 2 new companies in August with Mark Nicholson and Kieth Reid as Directors. Lets hope that this is just co-incidence and they are not following the route of stripping any half decent assets and leaving the rest and shafting the supply chain.

By bday

Amazing, absolute shocker. Building contractor with a £28m hole in its balance sheet struggles to complete contracts that ib the main are not fully funded fractional sales schemes reliant on fast disappearing overseas investors. Impossible to predict. No due diligence on earth could have seen this coming.

By Slightly sceptical

This company has more lives than a cat. Unsure of how they keep winning work though.

By Baffled

The whole concept of a limited liability (non-liability) company is just a huge swindle, a legal instrument, set up for company promoters, major shareholders and directors. That is why Northern factory owners, Liverpool and Manchester bankers and the Liverpool and Manchester Boards of Trade aggressively and publicly opposed a Limited Liability law for over a decade. But the London capitalists and their lackeys passed the law anyway.

By James Yates

Cant see why any bank would want to refinance this company unfortunately the inevitable seems to be on the cards margins for main contractors are that fine it is near impossible for any of them to make profit never mind trying to satisfy the huge losses this company has made , It has been well known in the industry for 12 months or more that they were bad payers and were not a stable company to work with, anyone that this has come as a shock to is deluded buying turnover to stay afloat.

By D Taylor

is it a surprise considering the majority of ex-Carillion directors / employees who moved there recently……. cursed.com!

By shambles

How to accumulate huge debts but avoid paying your creditors. Dead easy. Call your business a Limited Company. What the heck is that? It is a cunning plan (artificial legal construct) devised by legal tricksters for business tricksters (company promoters and the wealthy) to pocket profits and avoid losses. Too good (oops, I mean bad) to be true? See this link:

https://www.managerism.org/topics/governance-compliance/thinkpiece-no-31

By James Yates

Got to feel sorry for the workforce, subcontractors and the suppliers in this situation. The industry seems all wrong when something like this happens.

By Anonymous

Sounds like it is knackered. There is nothing to refinance in a contractor except losses.
Accounting errors? Rubbish. Just haven’t got the expertise to recognise cost to complete exceeds contract values.

By Anonymous

how does a company miss-lead/forecast – 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
£22.8m difference in accounting was it run by idiots
shame for long serving staff not the overpaid who have joined from Carillion and the supply chain if this all goes wrong

By sceptical

I just hope that these two new entities have not been formed to remove any good projects should Forrest enter into administration into them and leave the Administrators with the bad projects to administer and leaving those Clients and the Supply Chain at their mercy!!!

Trust that if Administrators are appointed, they defend this and seek alternative and better terms with others and try to recoup as much cash so that those who may lose may get something back!!!

By IR

Will this be another ‘limited liability’ company that goes under owing the supply chain millions? Took on countless ‘senior’ managers from Carillion, costing hundreds of thousands, who seemingly have done very little to add expertise and improve things there. I just hope the staff and supply chain are treated fairly and get paid for work done

By Anonymous

This should not come as a surprise to anyone in the building industry, overstating performance and painting a picture of an amazing company when we all swim in the same pond and know these figures just are not true…..open your eyes everyone…Carillion on a smaller scale but still devastating families and the supply chain….

By Didn'tseethatcoming!

Same people new Name only!! A little bit of indemnity(security) built in for the directors, so they can make bigger mistakes – You can check it on Companies House.

By Dave

So let me get this right, a director from Carillion , who (with the other directors) failed to manage and direct that company, was considered to be a great choice for running this failing company?? …well at least his track record of failures will be intact (what an idiotic appointment)….What (if any) finance house will back this company now?? they will be throwing good money after bad…just a pity that GMCA stepped in, I wonder how much that cost??? Again Subcontractors, Suppliers and Employees taking the hit……..The Accountants who did the books should also be held accountable…..no wonder Forrest cannot get subcontractors to work for them.

By Anonymous

No surprise within the industry. Subcontractors have been steering clear for a long time. Feel sorry for those in the supply chain who will suffer when the inevitable finally happens.

By Anonymous

Amazed that the refinance deal actually happened in 2017. This situation has been waiting to happen prior to that refi deal.
So although current management should bear some blame, some is also down to prior management.
Directors are the winners, especially those in office prior to March 17 refinance, and current directors on great deals with the company.
Bids/Tenders obviously not reviewed rigorously to ensure costs and profit sufficiently covered.
Investors obviously not conducted due diligence correctly or had wool pulled over their eyes

By Construction guy

Subscribe to our newsletter