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Lakesmere reveals £6m debt from Middle East ventures

Lakesmere was owed more than £6m from its Middle East subsidiaries when it went into administration, according to the firm’s directors.

The debts were revealed in a statement of affairs filed by Lakesmere’s former bosses as part of the administration process. 

The document, which details all the assets and liabilities known to the company’s directors, showed Lakesmere Arabia, which was formed to carry out work on King Abdullah Aziz International Airport in Saudi Arabia, owed its parent company just over £2.3m at the time of its collapse in October.

Lakesmere Dubai and Middle East owed £1.8m, while Lakesmere Oman, formed to deliver contracts on the country’s Muscat and Salalah airports, had an outstanding debt of £2m.

A fourth overseas entity established in 2014, Lakesmere Hong Kong, also owed the company just over £517,000.

Lakesmere’s overseas operations accounted for approximately 20 per cent of the company’s turnover.

Former chief executive Ted McMullen told Construction News in September 2016 that it had ambitions to expand its international turnover, especially in Hong Kong, to counter any Brexit-related slowdown.

Out of the four overseas entities, the directors only expect to recover £1m from the Oman venture, which would reduce the intra-company debt owed by the subsidiaries to approximately £5.6m.

Overall the directors expect just under £6.9m will be realised from the administration of the company’s assets.

This will be used to pay preferential creditors, who are owed £19.5m, with lender HSBC holding most of the credit.

A further £10.5m is owed to unsecured trade creditors, which have “no prospect” of recovering any money owed according to the firm’s administrator Deloitte.

In addition, the directors claim that Lakesmere was owed substantial sums on two Crossrail projects, including £1m on Paddington station Vent Shaft Head House and £339,000 on Liverpool Street station.

The Liverpool Street cladding contract was taken over by Kaicer, the building envelope company launched in November by Mark Davey, who founded and ran Lakesmere until a management buyout in 2015.

Construction News understands that the cladding at Paddington is being overseen by the Costain Skanska JV that is delivering the station.

The statement of affairs has been compiled by Lakesmere’s former directors to give their account of the company’s financial position when it went into administration.

Appointed administrator Deloitte said its calculation of the company’s liabilities and money raised from assets may differ from the directors’ expectations.

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