Rescued architectural firm Archial has shut two of its 16 offices – but insisted the move would not result in job losses.
The firm, which collapsed into administration last month before being picked up by Canadian business Ingenium, has merged its Ipswich and Bedford offices into a larger operation based at Cambridge.
It said it would move into new offices in the city by the end of the year, with staff working out of a temporary base in nearby Histon till then.
An Archial spokeswoman said the practice was still going through a consultation process with staff which it would complete in the coming weeks. “However, any new potential redundancies are not envisaged,” she added.
Last week Ingenium chief executive Victor Smith said there were no plans to make any more redundancies at the business.
The Canadian firm that rescued Archial from administration has revealed that it looked at buying the business last year, but was put off by the size of its debts
Victor Smith, the chief executive of new owner, Toronto-based Ingenium Group, said it had looked at buying Archial 18 months ago as part of a plan to snap up a UK company to form a regional base for its international work. “[We were] dissuaded from progressing this interest at the time due to Archial’s historical debt situation,” he added.
According to the practice’s last report and accounts, debts at Archial then stood at £13.5 million.
"We were dissuaded from progressing due to Archial’s historical debt situation"
Archial went into administration for eight days last month after the banks froze its accounts following the decision by HM Revenue & Customs to issue a winding up notice against the firm, which owed it more than £3 million.
Ingenium bought most of the business from administrator PricewaterhouseCoopers, which is now deciding how much creditors will get back.
Smith said “there were no plans” to replace Chris Littlemore, the Archial chief executive at the time of its administration, and added that he does not expect job losses at the 340-strong business.
“The ability of the new entity to retain jobs was a significant consideration taken into account by PwC,” he added.
Joint administrator David Chubb said a number of firms had registered interest in Archial’s 60-strong Asia business, which is not in administration, but said any sale would not be rushed through.
Up to 20 firms bid to buy stricken firm before knot tied with Canadian company Ingenium
Archial was rescued from the brink of total collapse thanks to a lightning-quick deal, with up to 20 potential buyers being whittled down to one in just three days.
The firm announced on Tuesday that it had been bought for an undisclosed sum by privately owned Canadian business Ingenium, a move which Chris Littlemore, who has been retained as Archial chief executive, claimed would result in a “bright future” for the company.
The remarkable level of interest shown in Archial means that, in less than a week, it has gone from the peril of being in administration over millions of pounds-worth of debt to being part of a larger international and multi-disciplinary firm with all 340 UK staff retained on existing contracts.
But the deal thrashed out by administrator PricewaterhouseCoopers will not be such good news for creditors; and shareholders – who received an upbeat trading update from Archial in May – will not receive a penny.
Partner at PwC and joint administrator, David Chubb, revealed he had been handling “15-20” companies bidding to buy Archial last Thursday with the parties involved working through Sunday night to close the deal with Ingenium, the latest in a string of Canadian firms to buy up British practices.
“We had terrific interest,” he told BD. “It was a really good range of industry players. On Friday evening we had a shortlist of five. We later brought that down to two bidders which we looked at through the weekend.
“Circumstances dictated the speed but I would say this couldn’t have gone much better. We had immense challenges last week keeping the business alive in administration.”
It also emerged this week that the founder of Archial’s predecessor SMC Group sold his shares at the beginning of the year.
Stewart McColl had a 3.5% stake in Archial, but sold all 8,399,689 shares on January 28. At the time, the share price was 7 pence, giving his sale a value of £587,978.23.
At its peak in 2007, Archial shares traded at £1.89 but had fallen to 1.5 pence when they were suspended earlier this month.
Prior to going into administration, Archial was involved in at least four legal claims against debtors over unpaid fees, including one against construction and oil tycoon Ian Suttie.
The one part of Archial not acquired by Ingenium is the Sparch Asia arm, which employs around 60 people.
Current Archial projects include much of Birmingham’s BSF work; London’s 251-room Puddle Dock hotel; living quarters and leisure facilities for construction workers for a new Total E&P UK Limited gas processing plant in the Shetland Islands, the £46.5 million Plymouth Life Centre and Alsop Sparch’s newly completed Michael Faraday nursery and primary school in south London.
Collapsed architectural practice Archial has been sold to multi-disciplinary Canadian firm Ingenium.
The 400-strong Archial, which was led by chief executive Chris Littlemore and went into administration last week over unpaid taxes, will now become part of a new firm, Ingenium Archial Ltd.
Administrators from Price Waterhouse Coopers (PwC) would not comment on how much Ingenium had paid for Archial, its Asian arm Alsop Sparch and other “assets”, all of which have been trading as normal since going into administration, according to PwC.
The privately owned Ingenium Group employs 800 people working across disciplines including architecture, engineering, project management and interior design, with offices in Canada, the United States, Asia and the Middle East.
David Chubb, joint administrator and partner at PwC said: “We are delighted to be able to secure this sale and provide business continuity for customers, suppliers and employees alike in these uncertain times.
“Trading a professional services business in administration is extremely difficult and this success has only been possible as a result of the support of all these stakeholders. I would like to thank them for their assistance throughout this difficult period.”
Shares in Archial Group PLC were suspended from the Alternative Investment Market on September 17. Following the insolvency of its companies, there will not be any value realised for the holders of the suspended shares, PwC said.
Archial has been put into administration and is up for sale just days after it suspended trading of its shares.
It emerged today that the listed London-based practice, formerly known as SMC, was unable to agree repayment terms over unpaid tax owed to HM Revenue & Customs and appointed joint administrators David Chubb and Graham Frost of PricewaterhouseCoopers, who are now seeking a rapid sale of the business.
Chubb said: “In response to changes in market conditions, Archial Group PLC had taken a number of steps to improve operations and to develop a sustainable and profitable business going forward.
“However, due to difficulties in meeting the group’s financial obligations, the directors have concluded that various companies in the Group, including Archial Architects Limited and Alsop Sparch Limited, should be placed into administration to protect the business and assets. “
On 26 August, the practice, which employs 400 staff worldwide including around 200 architects, announced its full year results would be “significantly below market expectations” as a result of the unpaid tax.
A previous update in May by the firm - which is led by chief executive Chris Littlemore - said trading for the first four months of the year was in line with management expectations. It had forecast to make a pre-tax profit this year of £3.4 million on turnover of £30.5 million.
Earlier this year, Archial started work on a £27 million mental health facility in Dumfries and in May the practice, one of two listed on the London Stock Exchange’s Alternative Investment Market (AIM), said it had £60 million worth of jobs in the pipeline.