14 March 2011 – loss of contract
The specialist engineering group Redhall has stunned the market by revealing that its contract to fabricate and install pipework for a new bio-ethanol plant for Vivergo Fuels has been terminated. Vivergo is a joint venture between BP, British Sugar and DuPont. So far, Redhall has completed 78% of the original contract plus variations and there are currently £14m of costs on the contract which are still unpaid. Redhall intends to pursue the recovery of these costs together with damages although this will be subject to the normal legal process. Following the agreement of new bank facilities announced at the end of January, the group has sufficient headroom to pursue its entitlement under the Vivergo contract as well as fund its ongoing working capital requirement. This is clearly bad news for the group as it was its largest contract. There also seems to be some confusion over 400 workers employed on the project with Redhall saying they have been transferred to Vivergo and Vivergo insisting they remain with Redhall. Until a clearer picture emerges AVOID.