MAJOR contractor Costain is at the centre of a furious row after withholding £2.8m in retentions, forcing TEG Group, a national waste recycling sub-contractor and specialist green technology business, into administration.
TEG Group handles over 300,000 tonnes of organic waste a year through processes including anaerobic digestion.
The company, which offers tailored organic waste solutions throughout the UK, said the £2.8m owed by Costain was hampering its working capital requirements.
The retentions were held back after TEG carried out work for Costain under the Greater Manchester Waste PFI Contract.
The board of TEG said it had spent a long time in discussion with Costain, working to release these retentions which were held under the contract for over two years.
TEG had been undertaking remedial works for Costain as part of a programme of works to manage the conclusion of the contract.
TEG had proposed options to exit the contract but these were rejected. However the parties remained in dialogue over the execution of the contract.
Just before Christmas the TEG board announced that it was unable to secure further funding and following discussions with its lenders it was obliged to appoint administrators at Deloitte.
TEG had previously announced that it would explore the sale of its operating division as a going concern after failing to secure any retentions from Costain owed and due to the ongoing costs of managing the contract.
Joint administrators Daniel Smith and William Dawson of Deloitte concluded the disposal of TEG subsidiary Simpro Limited to Veolia ES (UK). Simpro is a Midlands-based composting business that TEG Group acquired in 2010.
When this issue went to press the other subsidiaries TEG Energy and TEG Environmental were continuing to operate under the control of administrators while the they search for buyers for those businesses.
This article has been reproduced from the Contract Flooring Journal. You can find them at www.contractflooringjournal.co.uk.