Organics recycling firm TEG Group has requested that its shares on the Alternative Investment Market be suspended while it explores its financial options, including selling part of the business.
TEG said it is owed £2.8m in retention payments by construction company Costain as part of the Greater Manchester Waste Contract. The company said it had been working with Costain to release these retentions for more than two years.
In 2009, TEG announced that that it had been contracted to provide Costain with four in-vessel composting facilities in the Greater Manchester area in Rochdale, Bredbury, Bolton and Trafford Park.
TEG said that its Engineering, Procurement and Construction (EPC) Division “continues to bear the cost” required to manage the conclusion of the contract and was therefore looking for an early exit.
The company was told on 27 October that this would not be possible, although the parties will remain “in dialogue over the execution of the contract”.
A TEG statement said: “The Board believe that there is no prospect of the release of any of the retentions owed to TEG in the near future which will impact significantly on working capital requirements, as highlighted with the interim results on 30 September 2014.”
TEG also said that it had not been able to secure financial close for a EPC Division’s project in Gaydon and other planned works had been put back to 2015. “Therefore the group has no prospect of securing the revenues required to sustain the EPC Division in the short to medium term,” it said.
As a result, the board has requested that its shares be suspended while it examines “funding options”, including the sale of certain parts of the business.
In March this year, TEG Group posted pretax losses of £2.7m.
A Costain spokesman told MRW the company “has nothing further to add to TEG’s announcement”.