Andre Redinger says stricken contractor’s liabilities were ‘three or four times’ amount he first offered, leading to reduced bid this month
The South African entrepreneur who was set to buy ISG has told Building that the amount of money needed to put the business back on an even keel was “three or four times” the initial value of the price he offered for the firm.
Andre Redinger, who made his fortune from nutritional products, set up a company to buy the contractor called Antipodean Holdings with former Multiplex staffer, Australian James Peter Overton. The pair knew each other from before with Overton then working with Redinger on the ISG deal after he had left Multiplex.
The 52-year-old said he made a bid for ISG in the spring after being alerted to the possibility of a deal to buy the company from a former ISG employee and friend of Overton’s.
He spoke to William Harrison, the US billionaire who runs ISG’s former owner Cathexis, a private equity firm, at the end of February and made an offer a few weeks later.
“The price agreed seemed compatible with what we knew on the surface,” he said.
But he added that due diligence carried out by a team of auditors, believed to be from Deloitte, found ISG’s finances to be in a far worse state than he believed.
He said: “The liabilities were three or four times the purchase price, they were way bigger.”
Building has been told Redinger was prepared to put in £140m to recapitalise the company. He declined to comment on how much he had initially believed was needed but added: “It was more than £140m.”
He said his auditing team had found ISG’s construction arm to be “a bottomless pit as to where the liabilities were. There were a lot of contracts.”
Months of due diligence, which he said “meant we knew more about the [ISG] business than they [the management] did,” eventually saw him make a revised, lower offer for the firm earlier this month.
He declined to comment on suggestions the offer was £1, as well as asking for guarantees from Cathexis to underwrite certain loss-making jobs. But he said that “because of the size of the [financial] hole that needed to be addressed, it became obvious to me and my team that we had to have some very sober conversations”.
Several days after the revised offer was made, Redinger said ISG stopped communicating with him. “I don’t know why. I was told they were dealing with an internal issue that was unrelated to us.”
ISG collapsed into administration last week with 2,200 jobs lost immediately. A further 200 jobs are set to go as the administration process winds down.
Both EY and former ISG chief executive Zoe Price said Redinger didn’t have the money in place to complete the sale. EY said: “We wish to be clear to employees, suppliers, and customers that it was not possible to conclude a sale as the potential purchaser could not, despite repeated requests of them to do so, adequately demonstrate that they had the funding needed to recapitalise the business and keep it solvent.”
But Redinger said he was being made a scapegoat for the collapse. Speaking about ISG’s reaction to his claims the business stopped communicating with him on 12 September, he said: “It just confirms what they are, their culture didn’t fit my culture.
“What brought ISG to where it is, I wasn’t involved in that. They needed a rescue because of what they had created.”
He said: “They said they didn’t see enough proof of funding. I did have the money. 1,000% I was ready to put money in that was needed. We had a robust turnaround strategy but I was not going to throw money into an existing business and say ‘carry on’.”
>> See also: Potential saviour did not have enough money to buy ISG, administrator says, as 2,000 jobs lost in collapse
He added that he had sounded out others in the industry about the firm and had set up a shadow board while the sale process was ongoing.
He also said that an email sent by ISG chairman Matt Roche on 5 July, promising a deal “in the coming days,” had been brought forward from the end of that month to “calm nerves” among staff and the wider industry.
Towards the end of June rumours began to surface that ISG needed a cash injection from Cathexis to keep going with £100m widely believed to be the required figure – although Building has been told the number was closer to £250m.
Redinger said he agreed to bring the email forward but asked for his name to be kept out of the public domain. “I was comfortable with the announcement but didn’t sign it off,” he said. “People were leaving. It became apparent we needed to comfort he market. There were staff resigning and we didn’t want to end up with a shell.”
He said switching money from South Africa held up the sale process as did US Know Your Client regulations but added: “We had a proper turnaround planned. It was based on reality, it wasn’t delusional. I’m very, very sad for the employees. I’ve had some contact me. It could have been saved. We had the right plans and we would have saved it.”
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