Severfield-Rowen chief executive Tom Haughey has departed as the firm reported cost overruns on the Cheesegrater project and entered talks with banks.
Chairman John Dodd has been made executive chairman and will seek to “re-establish the credibility of the group with all its stakeholders”.
The company said today that it was also “in discussions with its lending banks regarding compliance with its covenants”.
It comes after previously reported pricing pressure and problems with contracts, alongside a major restructuring of the structural steel firm.
“Since then our UK performance has been further, and materially, adversely affected by cost overruns on our 122 Leadenhall contract,” the firm said in a pre-close trading update.
The board intends to “review expeditiously its current contract base and will provide a further update to the market, as soon as possible, when it has greater clarity on the financial impact of this exercise”.
It added: “In light of these recent developments, the board has concluded that a change to the leadership of Severfield-Rowen is required to re-establish confidence with all the group’s stakeholders.
“Accordingly, chief executive Tom Haughey is standing down from this role and leaving the board with immediate effect.”
It follows £1.6 million-worth of cost overruns on contracts and a major restructuring at the firm.
The board said it was “actively engaged in a search process to identify a permanent chief executive”.
Mr Dodd said: “My task now is to re-establish the credibility of the group with all its stakeholders, bring greater control and discipline to its operations and secure Severfield-Rowen’s longer-term financing.”
Discussions will continue with lenders with the “objective of placing the group on sound financial foundations that support its UK business and the further development of its Indian joint venture”.
As of 31 December 2012 net borrowings were £30m with the order book stable at £209m.
Mr Dodd said that with a stable order book and confidence “the longer-term fundamentals of the group are strong”.
But he said: “I am, however, extremely disappointed in the need to make this latest trading update.”