Former workers at failed builder protest as questions grow over giant ruby's role on balance sheet
Workers at collapsed construction firm Wrekin staged a protest yesterday after 420 lost their jobs.
According to news reports, workers met at a service station on the M54 in Telford before driving in convoy to the offices of the failed builder.
The news comes as more information has emerged over the collapse of the UK firm, and in particular the role played by a ruby valued at £11m on the company's balance sheets.
The “Gem of Tanzania”, previously owned by Tamar Group, a vehicle of businessman David Unwin, revived the balance sheet of Wrekin Construction after it was swapped with him for £11m in preference shares in 2006.
According to Wrekin's accounts, the ruby was valued at £11m by a professional valuer at the Instituti Gemmologico Italiano based in Valenza, Italy, on 31 August 2007. However, auction house Christie's told the Financial Times the highest recorded value for a ruby was £2.6m.
On its move into administration, the Shropshire contractor was facing five winding-up petitions and more than 10 county court judgments. It had also had its insurance cover pulled because of concerns over its credit rating. As a result, suppliers to the company would have either stopped trading with it or significantly reduced payment times.
The withdrawal of credit insurance underlines comments made by the group's banker RBS, which said the business was “unsustainable due to the extent of creditor pressure”.
Local Conservative MP Mark Pritchard blamed the collapse of the company on the inflexibility of RBS. He said that the bank had not been willing to ease the firm's short-term cash flow despite the company having an order book worth tens of millions of pounds.
He said: “These were avoidable job cuts. The government is the majority shareholder in RBS but they have taken no action to save these jobs despite being alerted to the fact there were cash flow problems.”
Earlier this year, RBS pulled the plug on another Midlands business - Pettifer Group.
An RBS spokesman denied there was any connection between the two. He said: “Each case is judged on its own unique terms.”
Last month, Building revealed that more construction and property companies have had their overdrafts cut than firms in any other sector of the economy. A study by strategy consultant Roland Berger revealed that 44% of construction and property firms have had unused credit cut, compared with an all-industry average of 34%.