Ongoing difficulties at Bolton-based contractor Forrest have hit the construction supply chain in the North West with Sale-based M&E contractor Proline now struggling to stay afloat, and another company issuing a winding-up petition against the business.
Proline, which has also worked with main contractors including Kier and Bardsley, has been forced to call in Cowgill Holloway in a bid to keep trading after being hit by cash flow problems following Forrest’s troubles.
It is understood Proline is owed in the region of £1.5m by Forrest, and other main contractors have been forced to bring in other companies to complete jobs that Proline was working on, while some have employed Proline staff directly. Sources close to the company said: “Proline were expecting a £1.5m cheque from Forrest last week that never materialised and that’s caused all sorts of problems”.
Two of Proline’s jobs with Forrest are understood to be among the main contractor’s problem jobs; X1 The Gateway and X1 The Plaza.
Other projects Proline had been working on include the £4m Limecroft Resource & Care Centre with main contractor Kier; The £30m Blossom Street PRS development in Manchester with Mulbury and Bardsley; and at Kings School in Chester with Carefoot Construction.
Proline’s latest accounts, covering the year to 30 September 2017, show the business is profitable, with a pre-tax profit of £469,000 on a turnover of £11.3m. According to these accounts, the business employs 73 people.
Following Forrest’s troubles, where the contractor was first forced to deny it had entered administration, then confirmed it was looking to sell its energy and housing businesses, other main contractors contacted by Place confirmed they had seen a number of other subcontractors struggle as a result.
Subbies including concrete frame company Heyrod have already walked off sites including Plaza 1821 in Liverpool in a dispute over payment, with others refusing to come to site unless paid on a pro-forma basis.
Crane hire business HTC Wolffkran has also issued a winding-up petition against Forrest, published in The Gazette late last week. This is due to be heard on 9 January.
Forrest confirmed it had failed to secure a refinancing deal last week, with discussions over the future of the company’s new-build business, which has borne the brunt of its problem contracts, understood to be ongoing.
The company’s chief financial officer said last week Forrest was “continuing to work with FRP Advisory” to find a solution to its woes, although the new-build business has already been replaced on a series of contracts, including Elliot Group’s The Residence, as revealed by Place last week.
Forrest has found itself in difficulty after it unearthed a pre-tax loss of £26m last year, 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.
He was jailed for four years at a Bolton Crown Court hearing in June this year.