Redhall accepts £2.1m settlement over Vivergo dispute

REDHALL Group has accepted an offer of £2.1m as a final settlement of its contract dispute with Vivergo Fuels.

The specialist engineering support services group said it falls “considerably short of the amounts the board believed were recoverable”, based on the views of its professional advisers throughout the legal process.

But it says the protracted timetable for recovery of monies through further legal proceedings; the uncertainty as to the ultimate outcome of such proceedings; and the cost and cash outflow implications pose an unacceptable level of risk to the group.

It said “after careful consideration” it accepted the offer which it believes is in the best interests of Redhall’s stakeholders.

The offer was made following a series of talks held subsequent to the judgement being handed down on December 16 and ahead of the cost hearing scheduled for January 29.

Redhall said: “The carrying amount of the Vivergo contract on the balance sheet at September 30 2012 was £9.8m and therefore there will be an exceptional charge in the financial statements for the year ended September 30 2013 of £7.7m before tax and legal and professional costs incurred in reaching this settlement.

“The net cash proceeds will be used to extinguish in part the newly increased and extended bank facilities which were announced on January 9. Other than for this aspect, the new banking arrangements remain unaffected by the settlement.”

Chief executive Richard Shuttleworth said: “We are pleased that in reaching this settlement we can draw a line under the matter. Whilst the settlement is not at the value we had anticipated, with our new banking facilities we can now focus our resources on growing the business which has made a positive start to 2014.”

Redhall Group’s share price was -0.5p at 51p at 2.30pm on Thursday. It later closed at 44p, down 7.5p.

Redhall will release its preliminary results for the year ended September 30 next Thursday.