The board of NMCN has decided that the company is no longer a going concern due to the extent of its loss-making contracts.
Administrators from Grant Thornton are preparing to start work breaking the group up.
NMCN plc and its subsidiary, NMCN Sustainable Solutions Limited, have resolved to file with the court notice of intention to appoint Helen Dale, Nigel Morrison and Jonathan Roden of Grant Thornton UK LLP as administrators. Remaining companies in the group are currently unaffected.
Administration comes after weeks of trying to sign off the company’s overdue accounts in time to effect a rescue deal.
In June 2021 NMCN agreed a refinancing proposal to raise £24m by selling control to new investors, including Carlisle-based Svella, set up in 2018 by former Stobart executives Andrew Tinkler and Ben Whawell to invest in under-performing companies.
Part of the plan was a renegotiation of its lending facilities with Lloyds Bank and raising up to a further £5m through an open offer to existing shareholders.
However, completion of this transaction was conditional upon publication of a prospectus and circular (among other things) to seek shareholder approval. But to publish the prospectus and circular to convene the necessary general meeting, it first had to sign off its 2020 annual accounts for inclusion within the documents.
However, completing the preparation of the accounts revealed further underlying contractual issues with expected losses rising to £43m.
Trading in NMCN shares on the London Stock Exchange was suspended at the end of June as auditors struggled to confirm what it would cost to complete ongoing work and how much money was likely to come in.
The board said yesterday (4th October 2021): “It has now become apparent that the company will be unable to approve the audited financial statements in a timely manner to allow the proposed transaction to complete within the required timeframe. This in turn has led to significant liquidity issues for the group and particularly the company, which unfortunately is now considered to no longer be able to continue trading as a going concern.”
It added: “Indicative offers have been received from certain parties for the acquisition of certain of the trading operations and/or subsidiaries of the company on a going concern basis, and discussions are ongoing with further parties which may lead to indicative offers on a similar basis.”
Shareholders have been warned not to expect anything back out of this process.
The board said: “Following discussions with its advisers, it is expected that this process will be conducted out of administration, to safeguard the continuity of operations and employment, and consequently the consideration receivable by the company is unlikely to result in any value for equity shareholders.”
NMCN has approximately 1,700 employees. It was founded in 1946 as North Midland Construction, changed its name in November 2018 to NMCN (which the company liked to style in lower case - nmcn). The second N referenced its process engineering brand, Nomenca.
Grant Thornton director Rob Parker said: “I can confirm we are working with the directors of the group and parties who have expressed an interest in the business in an attempt to maximise the position for its employees and creditors."
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