Rok administration puts 3,800 jobs at risk
Tuesday 09 November 2010
Rivals were eyeing Rok's business and clients last night after the building and social-housing repairs group went into administration, putting about 3,800 jobs at risk. The news follows two profit warnings and the discovery of financial problems at the company's plumbing, heating and electrical (PHE) business earlier this year. It also comes on the back of the demise of Connaught, the rival social-housing group that went into administration in September after being hit by local authority cutbacks in the wake of the Government's austerity drive.
PricewaterhouseCoopers was drafted as administrator shortly after trading in Rok's shares was suspended.
Mike Jervis, the PricewaterhouseCoopers partner and joint administrator, said: "In response to changes in market conditions, Rok Plc had taken a number of steps to improve operations and to develop a sustainable and profitable business going forward. However, due to difficulties in meeting the company's financial obligations, the company and certain subsidiaries have been placed into administration to protect the business and assets."Mr Jervis said his team's "immediate priority is to urgently review the financial position of the company and seek a buyer for the business".
He added later that PricewaterhouseCoopers had received a "lot of expressions of interest" in the hours after the announcement.
Meanwhile, Bob Holt, the chairman of the rival social-housing repairs group Mears, said he was "very much interested" in Rok's social-housing assets. "We'll be looking at what the administrator comes up with and as soon as he does we'll be having a word with him," Mr Holt said. In the wider sector, a source close to the construction group Morgan Sindall indicated that while that company was not interested in Rok as a whole, it "would be looking at targeting [Rok's] clients directly where appropriate".
Back in April, Rok disclosed underperformance at its PHE business, saying it had decided to "terminate a number of under-performing contracts and to restructure the business as a result". In August, the company followed that up by saying an independent review by BDO had uncovered "serious failings in the financial controls" at the division and that it had suspended its finance director, Ashley Martin. A subsequent investigation cleared Mr Martin and the company reinstated him "without reservation", but he resigned.
Rok's review had concluded that the problems at the PHE division, excluding its Avonside arm, were down to a "scaling back of sub-contracting work from the private-housing sector and a combination of weak operational, commercial and financial controls".
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