image source, Google image caption Cleveland Bridge is based in Darlington where it currently employs 139 people
The coronavirus pandemic, a political coup overseas and a misstatement on a £ 11million contract led to the collapse of a company 'engineering, directors said.
Cleveland Bridge entered into administration in July and, after a brief reopening , is set to close for de good .
In A report , the FRP directors said the Darlington-based company lost £ 3.62million in 2020 and is in debt of £ 21.7million. >
The company currently employs 139 people, according to directors.
The Cleveland Bridge was founded in 1877 and has helped build structures around the world, including the Arch of the Wembley Stadium, The Shard of London and Dubai International Airport.
The sThe Darlington-based company was profitable until 2019 when it recorded a loss of £ 157,000, FRP directors Martyn Pullin, David Willis and Iain Townsend said.
They said that there were a number of reasons for the failure of the business, including:
- A significant delay in starting projects due to largely to the pandemic.
- The need for overtime and agency workers when production on a number of projects resumed at the same time after the pandemic.
- "One-off costs " of £ 1.7 million in 2020 due to the pandemic.
- Delay in starting a "significant " overseas project due to 'a political coup, but the report did not specify in which country.
- An estimate error in the contract for a £ 11million project that resulted in zero gross margin, which made up the majority of hProduction rates for the first three months of 2021.
- "significant increase " in the cost of steel.
- Credit limits with suppliers have been reduced "putting more pressure on working capital ".
The report said forecasts showed an investment of £ 12million would be needed to keep the company going, which is owned by Saudi Arabian company ARPIC, operates until the end of 2021.
On July 16, the CFO of Cleveland Bridge told directors that ARPIC would not provide any further financial support "and therefore the company " would not be able to pay the wages the following week "with " inevitable insolvency ". ".
" All options were considered and it was decided the best way to preserve value was to seek a buyer for some or all of the business and assets of the business. 'businessse ", the report said.
Directors said they believed a rescue of the company as" going concern "would" not be achieved because the level of debt would be prohibitive for any potential buyer ", although they met 30" entities "to discuss a sale.
But they might" get a better result for creditors than what would be likely if the company were liquidated by resuming production, which they did in early August and which brought in £ 1.4million, they said.
Short-term loans were also agreed to pay salaries, administrators said, with 104 employees returning and 29 on leave.
FRP said it would continue to complete the existing projects, which are expected to end in the week of September 20, and negotiate with potential buyers or, if a sale "is not feasible ", sell assets forar "piecemeal or auction disposition ".
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