Struggling Carter & Carter goes into administration

Sarah Arnott
Tuesday 11 March 2008 01:00

The training company Carter & Carter is going into administration just 10 months after its chief executive, Phillip Carter, was killed in a helicopter accident. The company has approached Deloitte to manage the process after the collapse of debt-restructuring negotiations with its banks.

A former darling of the Stock Exchange, the Nottinghamshire-based firm's shares were suspended at 82.5p in October, a fraction of last year's high of £12.75.

Following two profit warnings last summer, Carter & Carter opened negotiations with Barclays, HBOS and Lloyds TSB for large parts of the company's debt to be cancelled in return for a significant volume of shares.

"But the banks decided the amounts of money they needed to put in were too great, so there is no alternative but to seek the support of an administrator," said the Carter & Carter interim chief executive, Rodney Westhead.

Though it started out in the automotive sector, Carter & Carter's biggest customers are now the public-sector Learning and Skills Council and the Department for Work and Pensions (DWP), for which it provides apprenticeship programmes and "out of benefit, into work" schemes.

The immediate task for the administrator will be to decide which of the group's subsidiaries can continue to trade and be sold on as going concerns, and which should be closed.

In the short term, the firm is committed to its 25,000 learners. "We and the administrator and government bodies have a great responsibility to make sure they continue to receive all the learning and training they expect," said Mr Westhead.

Carter & Carter started out in the early 1990s as a niche service-provider to the automotive industry. It grew rapidly, securing outside investment from Bridgepoint Capital in 2001 and more than doubling in size two years later with the purchase of Emtec, which offered technical services and support to the automotive industry.

Investors responded well to an aggressive expansion strategy, which included the purchase of the AA's technical services operation just a month before Carter & Carter went public in February 2005.

The shares were offered at £2.35 in the company's initial public offering – valuing Carter & Carter at about £78m – and the price rose by 25 per cent on the first day of trading.

The following August, the company diversified with the purchase of training group Assa for £24m, which took it into the transport, aerospace and food and drink industries, and into the government-funded vocational training market. Acquisition of the Fern Group, a leading provider of training under New Labour's New Deal programme, took the firm further into the public sector.

By April 2007, shares were worth more than £12, valuing the company at more than £550m. But cracks started to appear soon after the death of Phillip Carter, his son Andrew, family friend Jonathan Waller and pilot Stephen Holdich in May.

The shares dropped by 41 per cent in a single day after the first profit warning at the end of June, which was blamed on slow take-up of the Train to Gain apprenticeship programme. They dropped by another 80 per cent in July with a second profit warning issued after the firm failed to win the Government's Pathways to Work deals.

Another profit warning in October saw trading suspended and shares priced at 85p. The finance director John Green – appointed the previous year after the takeover of Assa – quit. And PricewaterhouseCoopers, the company's auditors, announced an investigation of accounting irregularities for the year ending 31 July 2007.

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