EY says buyer could not demonstrate they had funding despite 鈥渞epeated requests鈥� to do so
ISG鈥檚 potential saviour did not have enough money to buy the business, the firm鈥檚 administrator has revealed.
EY has been confirmed as administrator of the 拢2.2bn contractor which collapsed yesterday 11 weeks after announcing an imminent sale to a South African businessman.
But in a statement published this afternoon, EY said the sale had fallen through as the prospective buyer could not 鈥渁dequately demonstrate鈥� that they had the funding needed to keep the business solvent.
This was despite 鈥渞epeated requests鈥� for the buyer to confirm that they had the money to hand, EY added.
And in a call with staff this afternoon, ISG chief executive Zoe Price said the deal had failed because the buyer could not show that the funding was 鈥渞eally there鈥�.
She said: 鈥淭he reason a sale of ISG was unable to complete was not about a price for ISG or the amount of recapitalisation needed, it was that the buyer was unable to demonstrate that the financing was in place.
鈥淒espite continual engagement and commitment from us all here, the party in question could not show that the funding was really there.鈥�
Price added: 鈥淔or those of you that know me, and how passionate and committed I am to ISG, you will know that if there was a way of proceeding with a sale of ISG safely, we would have done it.鈥�
All of ISG鈥檚 operations in the UK have now ceased trading with immediate effect, consisting of eight entities including the group鈥檚 拢568m turnover fit out arm, by far its most profitable business.
Around 2,200 jobs have been axed 鈥渨ith immediate effect鈥�, with approximately 200 staff to be temporarily retained to assist administrators in winding down the business.
EY blamed 鈥渓iquidity constraints in recent months鈥� for the demise of the firm, the biggest collapse in the construction industry since Carillion six years ago.
It said directors had explored a number of options to secure the future of the business, including a sale of all or part of the group and refinancing options.
But an alternative sale or additional funding could not be secured 鈥渄ue to market conditions鈥�, resulting in ISG directors making an application to the court to place the firm鈥檚 UK entities into administration.
> See also: Ongoing projects involving ISG could be worth nearly 拢5bn
鈥淒espite significant efforts to secure a sale of the group over many months, a deal could not be completed,鈥� the statement said.
鈥淲hilst there has been misleading speculation surrounding the potential sale in the last few days, we wish to be clear to employees, suppliers, and customers that it was not possible to conclude a sale as the potential purchaser could not, despite repeated requests of them to do so, adequately demonstrate that they had the funding needed to recapitalise the business and keep it solvent.鈥�
Meanwhile, the Construction Leadership Council (CLC) has offered 鈥渟upport and guidance鈥� to individuals and organisations impacted by ISG鈥檚 collapse.
In an emergency meeting with trade bodies, skills providers and the Department for Business and Trade to discuss how to respond to ISG鈥檚 collapse, the CLC said it was aiming to ensure the fallout on the wider construction sector was limited 鈥渁s far as possible鈥�.
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