28th Oct 2014 09:57
LONDON (Alliance News) - The TEG Group PLC on Tuesday said it has requested the suspension of trading in its shares on AIM pending clarification of its financial position.
The company said it has been in talks with Costain PLC regarding the GBP2.8 million in retentions held under the Greater Manchester Waste Contract. TEG said it has been working with Costain for more than two years to release these retentions.
It said it has been undertaken remedial works for Costain as part of a programme of works to manage the end of the contract. TEG has been bearing the cost of the works needed to conclude the construction.
The company has been in talks with Costain regarding its financial position and said it was informed on Monday that it will be unable to negotiate an exit from the contract. The two will remain in talks about the execution of the contract.
In addition, TEG said it believe there is no prospect of the retentions being released in the near future, which will have a significant impact on its working capital.
TEG added that owing to it failing to reach financial close on the Gaydon contract in September, and the delay of other projects, it has no prospect of securing the revenue required for its engineering, procurement and construction arm to continue operating in the short to medium term.
TEG said it is exploring some funding options but has requested the suspension of trading in its shares until any uncertainty over its future funding position is resolved.
It said it would maintain its talks with Costain and said it will explore all financing and strategic options, including the potential sale of certain parts of the business.
Prior to their suspension, TEG shares were trading at 1.375 pence.
By Sam Unsted; [email protected]; @SamUAtAlliance
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