Dow Schofield Watts tried to buy Daniel Contractors
WARRINGTON corporate finance firm Dow Schofield Watts (DSW) was trying to buy Daniel Contractors before it went into administration with debts of £40m in May.
A creditors report, prepared by administrators at Deloitte, said the adviser targeted the firm through an investment fund.
Daniel, which is also based in Warrington, specialised in laying pipes for water companies.
DSW first came into contact with Daniel Contractors in early 2013 when it was hired by the group to find a buyer after a tough trading period.
The report said: “The group looked to protect its core business and initiated a sale process which was undertaken by Dow Schofield Watts.”
“The intention was to realise value through a sale of part or whole of the business, or if possible attract new investment. A number of parties were contacted, however
this engagement ceased after DSW expressed an interest in acquiring the company through an investment portfolio, which required the continued participation in the business of a number of key members of management.”
The group suffered increasing cash flow pressure due to “contractual issues that led to payment delays or losses detrimentally affecting the group’s liquidity”. And then it “allegedly breached” a covenant on a £9m facility with PNC, and several creditors filed winding up petitions. Nonetheless DSW continued buyout talks until Daniel’s directors filed a notice of intention to appoint administrators on May 7.
In the year to September 30, 2012 the company had turnover of £85.5m, up on £54.5m in the prior year, but earnings before interest and tax fell to a £4.8m loss, down on a profit of £483,000 in 2011.
The administrators have saved 1,226 of Daniel’s 1,449 jobs. More than 1,000, who were working on contracts with Bristol Water, United Utilities and Welsh Water, have been transferred to Enterprise, May Gurney and Murphy.
Murphy also acquired the assets of the Wirral-based Land and Marine Project Engineering subsidiary, and Derbyshire-based RadiusPlus saved a further 10 jobs when it bought the Subterra division.
When the business collapsed it owed PNC, its only secured creditor, £1.9m. A further £27m was owed to unsecured creditors with £16m outstanding to trade creditors, and £6.2m owed to HM Revenue and Customs. The business has assets of around £7m. Creditors face an exposure of £19.1m at Land & Marine.
