Getty ImagesThousands of jobs have been lost as international construction giant ISG’s UK operations fall into administration.
Around 2,200 employees have been made unemployed with immediate effect, joint administrator EY said in a statement on Friday.
The business, owned by US company Cathexis, had been struggling with financial difficulties for some time.
Attempts to secure a rescue deal failed, while 200 staff will be kept on to assist administrators in winding down the business, which has government contracts worth more than £1 billion.
Apple, Barclays and Google are also among ISG’s private sector clients in the UK.
In a much-discussed email sent by chief executive Zoe Price to all ISG staff on Thursday, she said: “Some of you may have seen reports in the media that ISG has filed for administration in the UK.
“Sadly I can confirm this is factually correct.
She said, “I didn’t want you to find out like this and the news shouldn’t have leaked out like this.”
Ms Price said staff would be paid as normal on Monday, and that the current situation had arisen due to “legacy issues” relating to “large loss-making contracts” obtained between 2018 and 2020.
“Selling these projects has had a significant impact on our liquidity. So even though we have been profitable this year, our legacy debt has pushed us to a point where we are unable to continue trading,” he wrote.
Ms Price said “considerable efforts” had been made to find a buyer for the business but these had been unsuccessful.
EY also said on Friday that any potential buyers that came forward had failed to demonstrate they had sufficient funds to finance the operations and continue them in the future.
He added: “We would like to make it clear to employees, suppliers and customers that a sale was not possible because the prospective purchaser, despite our repeated requests, could not adequately demonstrate that it had the funds necessary to recapitalise the business and keep it financially stable.”
Eight arms of ISG’s UK business, including its engineering and retail arms, have been placed under administrative control.
The group, which was working on a number of government contracts, has rendered most of its 2,400 British staff unemployed with immediate effect and has halted work on all projects.
According to data analysts Barbour ABI, ISG is involved in 69 government projects totalling more than £1 billion, including prison refurbishment work for the Ministry of Justice.
It also built the velodrome for the 2012 London Olympics.
Ed Griffiths, chief analyst at Barbour ABI, said current projects, including a £300 million extension to Grendon and Springhill prisons in Buckinghamshire, are “only the tip of the iceberg”.
“The impact of this would be extremely worrying for the hundreds of sub-contractors involved,” he said.
But a government spokesperson said the government had already put detailed contingency plans in place, and affected departments were working to ensure the sites remained safe.
