A large UK engineering and construction contractor, NMCN, is now in administration.
NMCN, based in Sutton-in-Ashfield, Notts, was a signficant firm in the sector and was behind a number of major projects including the redevelopment of Liverpool’s Lime Street station.
The business, which dated back to 1946, failed to sign off its 2020 accounts or secure a re-financing arrangement. It had been expected that had the accounts been financialised, the business would have reported losses in the region of £43 million.
NMCN had been trying to obtain a £24 million recapitalisation of the business, backed by investor, Svella.
The business had secured extensions of its loan agreements until early November with the intention of agreeing an equity raise by 18 November. It was due to publish a prospectus by 1 November, which in turn required the accounts to be signed off.
In 2018, the company had rebranded, in a move to “future-proof the business” having been formerly known as North Midland Construction and its subsidiary, Nomenca.
A spokesperson said that having taken advice, it was concluded the company was no longer able to continue trading as a going concern. “The board of NMCN wishes to thank all of its shareholders, customers and suppliers for their support over the years and particularly Svella and those who had intended to participate in the equity subscription that formed part of the Proposed Transaction, which has had to be cancelled.”
NMCN employed some 1,400 people and its last recorded annual turnover was £405 million, reported in 2019.
Subsidiaries Due to be Sold off
The administration affects the parent company of the group, NMCN plc, and its NMCN Sustainable Solutions Ltd subsidiary. To date, other subsidiaries are not “currently” affected. It was added NMCN had received offers from interested buyers for subsidiaries and these could be taken over as going concerns.
Shareholders are not expected to receive any dividends from the process.
Simon Renshaw, director with Company Debt, comments: “It’s unfortunate to see another business in the construction sector enter administration. NMCN was a relatively large and complex business and not all its projects were completed, which will lead to disruption, although not on the same scale as Carillion, which failed four years ago.
“So, what can be learnt from this? Well, it certainly demonstrates that a rescue is often challenging, in particular given the tight timescales with reporting requirements for listed companies. In this case, although an investor was lined up and the bank had agreed a temporary overdraft extension, this was not enough. Confidence was failing in part because of earlier problematic contracts and management change. When this is combined with rising cash flow issues then creditors will call for the plug to be pulled.”