Collapsed UK construction giant Carillion owed Irish group Sammon Contracting €8 million for work done on stalled school-building projects in the Republic, it has emerged.
On Thursday, the High Court granted Sammon Contracting Group protection from its creditors and appointed Michael McAteer of Grant Thornton as interim examiner to the business.
Miceál Sammon, the contractor’s founder and chief executive, confirmed after the hearing that Carillion’s liquidation had forced his company into examinership.
“Sammon will continue to trade as usual during the period of examinership which is intended to ensure that we can work our way out of current difficulties,” he said.
An independent accountant’s report supporting Sammon Contracting’s bid for examinership shows that Carillion owed the company €8 million for work done on a school building contract for the State.
The report, by Thomas McDonald of JPA Brenson Lawlor, states that the money was due for work done during part of October, part of November and all of December. Carillion collapsed on January 18th.
According to the report, Inspired Spaces, a partnership between Carillion plc and an investor, the Dutch Infrastructure Fund (DIF), won the contract to build the schools.
Inspired Spaces hired Carillion Construction Ltd, part of the plc, to build the schools in Carlow, Meath, Wexford and Wicklow. That company subcontracted the work to Sammon and agreed to pay the Irish business every month.
Contribution to turnover
Mr McDonald’s report states that the work would ultimately have been worth €100 million to Sammon Contracting and contributed €40 million of the company’s turnover in 2016 and €52 million last year.
“These receipts allowed Sammon Contracting Ireland Ltd to pay its creditors, its subcontractors, its wages and its other commitments on a monthly basis,” the accountant’s report says.
Sammon had to withdraw from the work on the five schools and one institute of education in the contract – dubbed Schools Bundle Five – following Carillion’s collapse, which meant construction stalled.
The remaining partner of Inspired Spaces, DIF, a specialist in funding public and infrastructure projects, confirmed on Thursday that it was seeking contractors to finish the work and that the closing date for bids was this week.
DIF’s spokesman acknowledged that Sammon, which is bidding for the work alongside several rivals, would be the “most logical choice” for this contract. He added that DIF would review all the tenders when it was making the decision.
The spokesman explained that the contract involved completing work on the schools by the beginning of the next academic year, in September, and for their maintenance over the long term. “We have to find the best long-term solution for all the stakeholders,” he said.
The case is due back in the High Court on April 16th. If Mr McAteer’s appointment is confirmed, he will have up to three months to develop a rescue plan, known as a scheme of arrangement, for Sammon Contracting.
Mr Sammon stressed that his company was confident the examinership would provide a framework in which it could continue its business into the future.
Sammon's other contracts include another school in Cork, a building for Shannon Airport Authority, and houses in Dublin and Waterford.