Around 2,200 workers have been made redundant and operations have stopped at all projects after ISG collapsed into administration on Friday.
Joint administrators EY said the UK operations of the ISG Group, owned by US-based investment firm Cathexis, ceased to trade with immediate effect on 20 September.
The companies that filed administration notices are ISG Central Services Ltd, ISG Interior Services Group UK Ltd, ISG Fit Out Ltd, ISG Engineering Services Ltd, ISG UK Retail Ltd, ISG Retail Ltd, ISG Construction Ltd and ISG Jackson Ltd.
In a widely reported email sent to all ISG staff on Thursday, chief executive Zoe Price said the company had been impacted by “legacy issues” relating to “large loss-making contracts” secured between 2018 and 2020.
“Trading out these projects has had a significant effect on our liquidity,” Price said in her email. “So even though we have been profitable this year, our legacy has led us to a point where we have been unable to continue trading.”
Price said that although “there have been significant efforts made to secure a sale of the Group over many months”, the sale was not concluded because “the purchaser could not satisfy the funding needed to recapitalise the business”.
She added: “Cathexis also looked at refinancing the company in recent months, but has been unable to execute.
“We also looked at selling individual business units to third parties but again, we have not been able to conclude these negotiations in the timescale.
“This has left us no option but to file for administration."
‘We were ready to strike a deal’
Potential buyer Antipodean Holdings claimed in a statement that ISG walked away from a deal to buy the contractor.
“Antipodean Holdings regretfully announces that it has been unsuccessful in its bid to acquire ISG from its current owner Cathexis. We had been working on the deal for over six months and despite finances being in place, ISG has chosen to go into administration,” said the company.
“It is an unfortunate end to what had the potential to be a fruitful acquisition. Antipodean had a robust turnaround plan in place and was confident we could save jobs and return ISG to growth and profitability. This plan was developed in concert with leading industry professionals and, in time, would have returned ISG to full profitability.”
Antipodean Holding’s director, South African businessman Andre Redinger, said: "Contrary to the email sent out to ISG staff, we were ready to strike a deal that would have secured the company’s future and the jobs of its employees.
“While our due diligence showed that ISG was in a much more financially perilous state and the company’s future much graver than we originally suspected, we were still committed to finalising a fair deal. While that resulted in an updated turnaround plan and working capital solution, from our perspective, the deal was still progressing.
“We were also still in the midst of good-faith negotiations with ISG’s current ownership when it suddenly stopped communicating with us on 12 September,” he added. “At no stage were we formally made aware of this decision to cancel the deal or to liquidate the business.”
ISG chief executive Zoe Price’s email to all staff in full
“Some of you may have seen reports in the media that ISG has filed for administration here in the UK. With sadness, I can confirm that this is factually correct.
“This was not the way I wanted you to find out and the news should not have leaked in this way. We had a managed plan to tell you what was happening on Monday once we had more clarity, but news has leaked at the filing stage – and that is why I am writing to you tonight [Thursday 19 September].
“Before I go into any more explanation, I want everyone to know that – contrary to the press reports – you will be paid on Monday as normal. I appreciate this is only a small comfort against a context of uncertainty for you all in terms of what happens next.
“You are owed an explanation of what has been happening over recent months. I know there has been speculation and rumour for some time, and we have tried everything to save ISG from this situation. And know there must have felt a lack of communication.
“The truth is that every communication we have done has been leaked to the press by a very small minority, which has not been helpful as we have worked to rescue ISG. And that is why we have been very cautious in the past couple of months.
“By way of background, the Group’s trading and cash performance has been impacted by legacy issues relating to the large loss-making contracts secured in between 2018 and 2020 (primarily in the Residential, Logistics & Distribution sectors as well as some Data Centre projects).
“Trading out these projects has had a significant effect on our liquidity. So even though we have been profitable this year, our legacy has led us to a point where we have been unable to continue trading.
“I want you to know there have been significant efforts made to secure a sale of the Group over many months. While there has been speculation for some weeks now, I can confirm that it was not possible to conclude a sale, as the purchaser could not satisfy the funding needed to recapitalise the business. Cathexis also looked at refinancing the company in recent months but has been unable to execute.
“We also looked at selling individual business units to third parties but again, we have not been able to conclude these negotiations in the timescale.
“This has left us no option but to file for administration. Again, I am so sorry to have to share this news
“I know all of you will still hold onto what is important at this time, whether that is ensuring we keep people safe, supporting colleagues, or managing clients and subcontractors
If you are site-based:
Sites will not open tomorrow. You are not required to come to site
We will be standing subcontractors down and there will be a controlled process for them to recover plant and tools once the administrators are formally in place. They will be notified when that is possible
Sites must be left secure and safe at all times
If you are office-based:
Offices will be closed.
You will be notified when you can come and collect your things.
Some individuals will be admitted should there be a requirement from the administrators for them to do so.
“Once again, I am so sorry to have to share this news. Thank you for all your support as an employee.
“The next step will be the appointment of the administrator and we will be in touch soon about what this means and how you can get the information you will need looking ahead.”
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Unfortunately ‘building companys’ are now governed by finance companies and not by a builder. If a company owned in this manner goes down, no one is going to touch it.