Rok collapse puts 3,800 jobs in peril
Construction group Rok has tumbled into administration with debts of £190m, leaving a cloud of uncertainty over the future of 3,800 workers.
Rok and a hard place: Construction firm was dragged down by its plumbing arm.
PricewaterhouseCoopers was drafted in as administrator to the 'nation's local builder' after a week of furious negotiations with major creditors failed.
Rival Mears (down 4.5p at 279.5p) said it would be willing to buy out all of Rok's social housing contracts and was in contact with administrators.
Banking sources said Rok's board was warned back in August by its lenders to be cautious going forward, but claimed management didn't want to admit the company had problems.
Rok chief Garvis Snook even bought £50,000 worth of shares in August and September in an attempt to shore up investor confidence.
The source said: 'The board made a disastrous mistake not taking the banks' advice back in August and it has cost them badly.' The collapse comes just two months after another competitor, Connaught, hit the buffers with debts of £220m.
At the time of Connaught's demise, a bullish Snook said his firm would be interested in buying some of his stricken rival's contracts. But yesterday he was silent, as trading in Rok shares was suspended and administrators began to comb through the debris.
Taxpayer-owned Royal Bank of Scotland is understood to be owed £35m, Clydesdale Bank £25m and HSBC £13m.
In addition, Rok has a £23m pension deficit and around £100m owed to subcontractors and other unsecured creditors.
A series of profit warnings this year triggered the Exeter-based firm's downfall, due to overvalued contracts in its doomed plumbing division, which was bought for £16.5m in 2007. Rok was forced to restructure the operation and contracts were cancelled.
In August, finance chief Ashley Martin was suspended because of the problems in the plumbing business, just days before it announced an interim pre-tax loss of £3.6m. Martin was later exonerated when the board were forced to issue a humiliating apology, but he resigned anyway, saying he had suffered 'eight weeks of hell' while an investigation was carried out.
With 55% of its business in the public sector, Government cuts also hit figures. PwC administrator Mike Jervis explained: 'The August profit warning marked the beginning of the end for Rok.
'It created less confidence in Rok. Demand dropped and suppliers refused to extend credit. Along with government cuts, that double whammy impact manifested itself in September's results, with turnover down 30% compared to budget and that carried on during October.'
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