Contract dispute causes cash crisis for Lancashire-based TEG group

Dialogue: Mick Fishwick, chief executive of the TEG group
Dialogue: Mick Fishwick, chief executive of the TEG group
Have your say

A Lancashire-based waste recycling group is in crisis as a result of a dispute over a £38m contract.

The TEG group, based at Buckshaw Village, near Chorley, has requested the suspension of trading of its shares on AIM pending clarity on its financial position.

TEG says its dilemma has been caused by £2.8m held back after it carried out work for Costain under the Greater Manchester Waste Contract.

The specialist green technology company, which offers tailored organic waste solutions throughout the UK, says the owed money is hampering its working capital requirements.

In an updated statement on the financial siutathion, the board said: “TEG has remained in detailed discussions with Costain in respect to the £2.8m of retentions held under the Greater Manchester Waste Contract.

“The Group has been working with Costain to release these retentions held under the contract for over two years.

“TEG has been undertaking remedial works for Costain as part of a programme of works to manage the conclusion of the contract.

“TEG has engaged recently in discussions with Costain in relation to the Group’s overall financial position, the release of the
retentions monies owed and TEG’s ability to continue to provide the requested remedial work under the contract.

“TEG had proposed options to exit the contract but unfortunately TEG was informed on 27 October 2014 that it will be unable to negotiate such an exit, though the parties will remain in dialogue over the execution of the contract.”

TEG said its Operations Divicontinued to perform satisfactorily and to trade profitably.

The board added: “The Group remains in discussions with its existing providers of finance regarding the on-going provision of facilities, will maintain a dialogue with Costain and will separately continue to explore all financing and strategic options open to it, including the potential sale of certain parts of the business.

“Further announcements will be made in due course.”

TEG handles around 300,000 tonnes of organic waste a year through processes including anaerobic digestion.