TEG Group placed into administration
Organic waste recycling company TEG Group plc (TEG) has entered into administration after failing to secure future funding.
The announcement was made by the Board on Friday (19 December), after two months of searching for new funding for the group.
The company has had a difficult few years, with TEG failing to realise the release of £2.8 million in retentions held under its Greater Manchester waste contract, despite two years of negotiations with construction company Costain.
Costain was appointed by the Viridor/Laing consortium to manage all construction projects under the Greater Manchester Waste Disposal Authority’s (GMWDA) £38-million contract in 2009, which was reported at the time to be Europe’s largest ever waste management PFI contract.
TEG was to provide four silo cage in-vessel composting (IVC) facilities by 2011, providing capacity to compost 175,000 tonnes per annum of green and food waste collected from householders in the Greater Manchester region. However, the contract was hit by several delays, which were blamed on a range of factors, including design flaws and delays to necessary site investigations, partly caused by ‘severe weather’.
Since then, TEG has been been undertaking remedial works for Costain as part of a programme of works to manage the conclusion of the contract. However, although TEG had proposed options to exit the contract, it was unable to negotiate such an exit.
As there was ‘no prospect of the release of any of the retentions owed to TEG in the near future’, the working capital of the group was ‘significantly’ impacted. This was exacerbated by the failure of the group to reach financial close on its proposed anaerobic digestion (AD) and IVC project at Gaydon in Warwickshire, and delays to other projects.
As such, the Board identified that there was no way of securing the revenues required to sustain its EPC Division in the short to medium-term, and that there was no value remaining in the equity of the group.
Simpro sold to Veolia
Daniel Smith and William Dawson of Deloitte LLP have now been appointed as joint administrators of the TEG Group and its subsidiaries, TEG Environmental Limited (Environmental) and TEG Energy Limited (Energy), and the group’s broker and advisory service, Nplus1 Singer Advisory LLP, resigned with immediate effect last week.
Environmental's and Energy's core sites are continuing to operate under the control of the administrators whilst they ‘explore the potential for going concern sales of these operations’.
If the company fails to appoint a replacement nominated adviser by 19 January, the admission of its AIM (formerly the Alternative Investment Market) securities will be cancelled (the company had temporarily suspended trading on AIM in October, ‘pending clarification of the company’s financial position’). However, it is said that it is ‘unlikely’ the administrators will seek to appoint a new advisor.
The administrators have already ‘successfully concluded’ the disposal of TEG’s air windrow subsidiary Simpro Limited to Veolia ES (UK) Limited.
The business consists of six sites and will continue to operate 'uninterrupted', with all 10 employees joining the Veolia group.
Gavin Graveson, Veolia’s Chief Operating Officer Public and Commercial in the UK, said: “This acquisition is in line with our core circular economy strategy to manufacture green products and extends our composting network to 14 sites across the UK. We are delighted to strengthen our position in this market place and offer an extended range of services to our customers in the Midlands.”