In a statement, TEG said that it recently engaged in discussions with construction firm Costain in relation to its overall financial position, the release of monies owed and its ability to continue to provide remedial work under the Greater Manchester waste contract.
TEG, a provider and operator of technological solutions for organics waste recycling, signed a £38 million deal to provide four Silo Cage in-vessel composting facilities under the Manchester PFI contract in 2009. The facilities were to provide 175,000 tonnes capacity for green and food waste recycling in Rochdale, Bredbury, Bolton, and Trafford Park.
Costain
Costain was retained by the Viridor/Laing consortium to manage all construction projects under the Greater Manchester Waste Disposal Authorty (GMWDA) contract, worth an estimated £3 billion.
TEG has been working with Costain to secure the release the retentions for over two years, while undertaking remedial works for the construction firm as part of a programme to manage the conclusion of the contract.
TEG had proposed options to exit the contract, but yesterday (October 27) the firm was notified that it would be unable to negotiate such a withdrawal.
In addition, TEG’s Board understands there is ‘no prospect’ of a release of the retentions owed to the firm in the near future – which will impact on its working capital requirements as highlighted in its interim results on September 30 2014.
Gaydon
In September, the Group posted losses of £2.5 million after tax, and announced that it was unable to reach financial close on its proposed anaerobic digestion (AD) and in-vessel composting (IVC) project at Gaydon in Warwickshire (see letsrecycle.com story).
The failure to close the Gaydon facilities, and the delay of other projects into 2015, means that TEG has no way of securing the revenues required to sustain its EPC Division in the short to medium-term.
A company statement reads: “Whilst the Group is continuing to explore funding options, until some form of resolution can ultimately be reached which would allow further funding to be secured for the current and future working capital needs of the Group, the Board has requested that trading in the shares of the Group are suspended until such time as this uncertainty can be removed.
“The Group remains in discussions with its existing providers of finance regarding the on-going provision of facilities, will maintain a dialogue with Costain and will separately continue to explore all financing and strategic options open to it, including the potential sale of certain parts of the business.
“Further announcements will be made in due course.”
Operations
However, the Group has also announced that its Operations Division continues to perform ‘satisfactorily and to trade profitably’. In 2013, its wholly-owned IVC operations at Todmoren and Telford underwent capacity expansaions, also passing the 1 million tonne mark for organic waste recycling in the same year.
The Board remains’ confident’ it will be able to continue the normal course of affairs in relation to the Operations Division.
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