Receivers in at Lilley after refinancing is blocked

LILLEY, the Glasgow-based construction company that survived and recovered from a pounds 50m loss in 1986, was last night forced to call in the receivers, finally paying the price for its subsequent diversification into property development.

Sir Lewis Robertson, the company doctor who is Lilley's chairman, and James Hann, his deputy, were critical of the chief executive who led the company to its current predicament, and of the banks that forced the company under. The collapse threatens the jobs of Lilley's 2,800 employees.

Two of Lilley's six banks, which are owed about pounds 60m, refused to support a refinancing that would have involved a pounds 12.5m injection of new equity, a debt-for-equity swap and the off-loading of its property exposure. Lilley said this rescue package was supported by Entrecanales and Cubiertas, the Spanish shareholders that own a 21.5 per cent stake, and by its three largest UK investors.

Sir Lewis blamed Bob Rankin, the chief executive he recruited in 1988. He said: 'It is unfortunate that the policies he spearheaded were pursued too long against a changing economic background.

'The board addressed this situation and a change of management produced a feasible way forward. I deeply regret that the requirement for unanimity among the banks has frustrated this, despite support from a broad front of investors and lenders.'

Mr Rankin left Lilley three months ago; Mr Hann, chairman of Scottish Nuclear, then became deputy chairman. Mr Hann said it was 'regrettable that after a two- month delay and a disruptive accountants' investigation, our banks are unable to reach the unanimous agreement required . . . ; regrettable too that a new management, which I understand the banks themselves pressed for, has not been allowed the time to put its restructuring proposals into effect'.

Lilley lost pounds 5m in 1991, and cancelled its last interim dividend despite returning to profit in the first half of 1992. The company has pounds 100m of work in hand compared with turnover of pounds 340m in 1991.

Lilley's problems began with its pounds 137m bid for Tilbury in 1989, which failed by the narrowest of margins but left it holding a near- 30 per cent stake that was falling in value.