Chigwell Construction pulls out of Rok deal

Grant Prior 14 years ago

Essex contractor Chigwell Construction has decided not to go ahead with plans to bid for the remaining Rok social housing contracts in and around London.

Chigwell bosses were talking to the administrator about the possibility of taking on part of the remaining Rok operations which have not been closed by PwC.

But managing director Dean Floyd told the Enquirer: “Having just completed a full review and carried out substantial due diligence, the Board have decided not to proceed with the remaining contracts that remain available.”

Chigwell is the latest in a long-line of contractors to pull-out of a deal for parts of Rok after seeing the state of the company’s books.

One contractor said: “It’s no co-incidence that the only deal done was for £7m for Mansell.

“You are talking about a firm that was turning over hundreds of millions but a closer look has revealed to everyone what a state the business was in.”

The news came as the Financial Times reported that Rok’s former finance director Ashley Martin warned the directors that its public statements risked misleading investors by failing to identify the scale of its problems.

The FT claimed the board of directors was contacted by Martin, at the time the suspended finance director, after Rok released a trading statement on August 11 that said it was “confident about the outlook” for its core maintenance and improvements business.

Martin is believed to have raised “serious” concerns about whether the company had adequately disclosed a significant fall in the forecast profitability for the maintenance and improvement business.

Martin is understood to have told the board it was failing to inform investors as to the true expected performance of the group and it risked creating a false market in Rok’s shares.

But the company took a different view on its prospects and reiterated its confidence about M&I, which was the largest source of profit for Rok during the first half of this year.

The warning came less than three months before Rok was put into administration.

The FT contacted former board members to ask if they felt, in hindsight, that the concerns had been adequately addressed.

In response to questions about how the board dealt with Martin’s concerns, lawyers representing Garvis Snook, Rok’s former chief executive and the chairman Stephen Pettit said: “The board took these assertions very seriously and so initiated a detailed and thorough investigation.

“The investigation was led by a senior independent non-executive director. The conclusions of the investigation were that the assertions made by Ashley Martin could not be substantiated and that the board acted properly and with due care in the announcements made to the market.”

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