Organics recycling firm TEG Group has indicated that it is unlikely to secure equity financing and is looking to sell its operating division.
The development follows the suspension of its shares on the Alternative Investment Market on 27 October while TEG explored financial options, including selling part of the business.
TEG claimed it is owed £2.8m by construction company Costain as part of the Greater Manchester Waste Contract but now says it has been unable to negotiate an exit from the contract.
The latest TEG statement says: “Given the ongoing costs associated with managing the conclusion of the contract and the associated remediation costs, in the absence of capital from the retentions the board believes that the provision of equity financing for the group [TEG] is extremely unlikely”.
The company said it continued to trade and remained in discussions with its providers of finance.
“At the same time, the board is exploring the sale of certain parts of the group, principally the disposal of its operating division as a going concern.
“The operating division continues to operate satisfactorily and indeed a new three-year waste recycling contract has recently been secured with a local authority customer which has the potential to generate revenues between £1.5m and £2m over the term of the contract.”
TEG says it does not believe that further funding will be secured to allow for its future working capital needs.
In October, TEG also said that it had not been able to secure financial close for a project in Gaydon and other planned works had been put back to 2015.
When shares were suspended in October, a Costain spokesman told MRW the company had “nothing further to add to TEG’s announcement”.