Letter from administrator BDO Stoy Hayward to creditors reveals price paid by McLaren and justifies pre-pack administration option
McLaren Construction will pay up to £810,000 for the assets of failed contractor Verry Construction, Building can reveal.
In a letter from administrator BDO Stoy Hayward to Verry’s creditors, seen by Building, it was confirmed the Essex-based contractor paid an initial sum of £250,000 for entering into a sale agreement, which will rise by up to £560,000 upon transfer of the contracts.
The £250,000 included unspecified contracts and contract debts for jobs that are no longer thought to be on site.
The letter stated: “We received five offers of varying sums for different packages of the company’s assets. There were three main contenders, one of which was the ultimate purchaser. The offers from all parties were broadly similar, with each offering for all the contracts and referring to the fact that they might look to retain certain members of staff.”
Rok, Kier and ISG are understood to have also been in the frame.
The letter also explains to creditors that a pre-pack administration was agreed with McLaren because it would minimise claims relating to £16m of performace bonds and therefore raise more cash to pay off Verry’s debts.
It said: “A comparison of recoveries based on the novation of the company’s contracts versus a sale on a break up/liquidation basis was undertaken. It was apparent that the novation of the contracts could reduce the company’s liabilities by minimising calls under a number of the bonds, in particular a £6.6m bond in respect of the contract with City of Westminster Council (Verry’s £67.7m City of Westminster College project).”
BDO also revealed that it was appointed by Verry in March to carry out a business review amid concerns over its finances.
It said: “The bank had issued a demand for the sum of approximately £4m against the group in respect of the company’s overdraft and mortgages over the group’s three properties, which was not met.”
McLaren is currently in talks with Verry’s clients about the transfer of the contracts. “Given that a lot of the deals are in the public sector, it is taking some time to make sure all the boxes are ticked,” said someone familiar with the situation.