Source close to sale says 10-15 firms are in talks; Collapse leaves £100m owing to supply chain
More than 10 contractors were this week wrestling for control of parts of listed builder Rok after it collapsed owing suppliers and subcontractors £100m.
The news comes as the full impact of Monday’s collapse, which came just nine weeks after rival Connaught went into administration, became clear.
The collapse leaves:
- £100m owed to trade creditors
- £70m owed to banks
- 711 confirmed redundancies out of 3,800 staff
- Other contractors, including Bovis Lend Lease, seeking assurances from their supply chains over exposure to Rok.
Administrator Pricewaterhouse Coopers was fast-tracking the sale process as Building went to press this week, aiming to sell the collapsed builder before its most lucrative contracts were cancelled, with a decision expected as soon as today.
A source close to the sale process said 10-15 companies had been shortlisted to take on its three divisions. It initially received more than 100 expressions of interest in parts of the company, which specialises in social housing, repairs and insurance work.
An industry source said a fight for one of the most hotly contested divisions, Rok’s social housing business, which includes most of its insurance work, was between contractors Balfour Beatty, Carillion, Kinetics, Mears and Mitie. Bosses from the firms travelled up to the social housing head office in Bolton to hammer out a deal.
Contractors including Leadbitter and Willmott Dixon are also thought to be looking at parts of the Rok business. Morgan Sindall is thought to be among those in discussions with individual Rok clients over some of its contracts. The firm this week admitted the contracts it picked up from Connaught would net it £60m less than it previously stated.
It is also understood that Morgan Sindall ran the rule over Rok a fortnight before its collapse, but did not pursue a bid owing to the company’s high levels of bank debt.
PwC partner Mike Jervis, leading the administration, said Rok owed suppliers £100m in total. This is less than half the £206m owed at the time of Rok’s last interim results up to June 2010. The reduction is explained by a huge drop-off in Rok’s business in recent months.
Sources said the firm had suffered from contract cancellations, tightening credit lines and loss of supplier and customer confidence since a profit warning in August following an investigation into its plumbing, heating and electrical business.
A source said: “It looks like their turnover fell off a cliff in the last couple of months. The social housing part doing several hundred million turnover was down to around £150m.”
Jervis admitted turnover had fallen and said several buyers were looking at buying one of the three divisions or the whole business.