Building firm in administration - and blaming RBS

BlondeHeadOn

From here:

http://news.bbc.co.uk/1/hi/business/7935357.stm

"Shropshire-based Wrekin Construction Group has gone into administration, threatening up to 600 jobs.

The firm said it blamed Royal Bank of Scotland (RBS) for its predicament because the bank would not extend credit to cover cash-flow problems.
RBS did not immediately respond to calls for comment.
Wrekin, which also has bases in Yorkshire, Northamptonshire and Cheshire, said it had millions of pounds worth of orders.
Building workers' union Ucatt said that a healthy company was failing because banks would not lend.
"There is a particular problem with the banks bailed out by government cash not passing it on to construction companies. This must be the last example of this problem," said Alan Ritchie, general secretary of Ucatt.
Mark Pritchard, Conservative MP for the area the firm is based in, said Wrekin Construction had been forced into administration because of RBS's "inflexibility" in releasing funds. Wrekin also has subsidiaries in subsidiaries in Staffordshire and Scotland. "

Radiantsoul

It might be that the bank was right not to lend it any more money though.

Presumably if the business is sound someone will buy it, or the contracts for work will be acquired by someone else who will now need builders.

johnycoldears

I am (was?) a quantity surveyor for Wrekin.

Not much to add really other than our forward order book which was £40 million just got increased to £90 million yesterday. Looks like it's too late now and we're going down.

Real shame as Wrekin were a good company suffering cash flow problems and being squeezed by RBS on one hand and by reduced credit insurance from suppliers on the other.

I ought to just clarify that we didn't build houses, our core business was civils (roads and bridges) and some rail works.

BlondeHeadOn

johnycoldears wrote: »

I am (was?) a quantity surveyor for Wrekin.

Not much to add really other than our forward order book which was £40 million just got increased to £90 million yesterday. Looks like it's too late now and we're going down.

Real shame as Wrekin were a good company suffering cash flow problems and being squeezed by RBS on one hand and by reduced credit insurance from suppliers on the other.

I ought to just clarify that we didn't build houses, our core business was civils (roads and bridges) and some rail works.

I'm so sorry johnycoldears, it must be particularly galling if you know the forward order book was sound.

johnycoldears

BlondeHeadOn wrote: »

I'm so sorry johnycoldears, it must be particularly galling if you know the forward order book was sound.

Very galling.

I also think this story is going to get a lot bigger. I understand that we approached RBS back in December to increase our overdraft facility by £2 million to about £6 million ( quite a small figure for a £100 million a year turnover company). Despite being bailed out by the Government and told to lend RBS have obviously failed to oblige. Mandelson was aware of the situation and failed to exert any pressure on RBS.

Whilst I understand that it is upto RBS who they choose to support at the end of the day I have a feeling that this will turn out to be quite embarassing for them.

Andrew64

Doesn't square with Brown and co wanting banks to lend to sound companies, does it? It must be all the more galling that the government owns most of RBS! It doesn't seem to make commercial sense if the company has 90M Pounds of orders.:huh:

BlondeHeadOn

johnycoldears wrote: »

Very galling.

I also think this story is going to get a lot bigger. I understand that we approached RBS back in December to increase our overdraft facility by £2 million to about £6 million ( quite a small figure for a £100 million a year turnover company). Despite being bailed out by the Government and told to lend RBS have obviously failed to oblige. Mandelson was aware of the situation and failed to exert any pressure on RBS.

Whilst I understand that it is upto RBS who they choose to support at the end of the day I have a feeling that this will turn out to be quite embarassing for them.

I [EMAIL="bl@@dy"]bl@@dy[/EMAIL] hope it will be very embarassing for both RBS and the government - this is just the worse kind of publicity they need right now.

:mad:

BenL

and RBS are using £800 Million of our money to prop up the gold-plated pension scheme.

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article5877790.ece

Surely the money doesn't have to be put in at the moment and just as and when it is required. Guess they are not very hopeful about a recovery so are banking the money now whilst they can.

BenL

Roads, bridges, railways? Government funded projects?

lostinrates

johnycoldears, I'm very sorry.

Its hard to know what to say so...just...sorry.

Radiantsoul

BenL wrote: »

and RBS are using £800 Million of our money to prop up the gold-plated pension scheme.

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article5877790.ece

Surely the money doesn't have to be put in at the moment and just as and when it is required. Guess they are not very hopeful about a recovery so are banking the money now whilst they can.

I suspect they have a legal obligation to keep the employees pensions sound, but no obligation to lend.