The firm’s Dutch parent Ballast Nedam turned out to be more of a Dutch uncle, criticising and shunning rather than nurturing its UK subsidiary. This week it cut off Ballast for good, leaving the company in the hands of administrator Deloitte.
The move followed the return to Holland on Monday of Ballast managing director Ruud Jacobs. Having been seconded to the UK to come up with a rescue strategy, he was told by his Dutch masters that his plan for saving Ballast would cost too much and take too long. Jacobs was only installed as MD in September when the future looked a little brighter for Ballast, and upon Jacob’s arrival Ballast Nedam was saying that it would finance the revival of its UK arm.
Deloitte, senior managers and advisors are now seeking buyers for Ballast, which has a large interest in PFI projects. Purchasers will need to be found quickly if existing PFI projects are not to be disrupted. The firm has PFI deals in place to build schools for the London Borough of Tower Hamlets (£110m), East Lothian council (£45m), and an HQ for Gloucestershire Police (£18m). Already subcontractors have downed tools and walked off some sites because they are afraid of not being paid for this month. Last week at least two of the sites in East Lothian were at a standstill.
Ballast has already been up for sale for a year without attracting any buyers but, despite this, Deloitte is bullish about the group’s prospects. “We are assessing the position of the companies with a view to seeking buyers for them, in whole or in part, as going concerns,” said Deloitte partner Nick Edwards. “Ballast has an enviable position in the PFI market, with substantial contracts in the education sector, and we are confident it can emerge from administration as a stronger and viable business.” Most of the interest from buyers has been in the services arm, which runs the PFI projects.
A management buyout of the £230m turnover firm is a strong possibility, which would probably be led by Phillip Cooper, managing director of the services division. A buyout backed by another contractor was set to go ahead in August but the Dutch parent refused the offer because the UK arm wanted project risk liability and a heavy pension fund deficit to remain with Ballast Nedam.
Ballast made a loss of £9.7m in the first half of this year – which was at least an improvement on last year’s equivalent loss of £32m.