Postern rescues Longley

by John Leitch



The Postern Fund - which specialises in rescuing businesses in trouble - has stepped in to save South-east regional construction firm Longley.

After running up losses totalling £15 million over the past 10 years, Longley's problems came to a head in January this year when its prestigious £26 million Chelsea Village contract was determined by the football club's chairman Ken Bates.

The Longley family's shareholding in the Crawley-based construction group has dropped from 100 per cent to 6 per cent as a result of the rescue by Postern. The new senior management will have a 9 per cent shareholding, with Postern taking the 85 per cent balance.

Michael Gurner, a Postern director, replaces Oliver Longley as chairman of the construction group which has a £50 million-a-year turnover. Longley said this week: "Things would have been difficult without help, though it is not certain that the company would otherwise have gone under."

Gurner said: "The fund started in 1991. It gets involved in turnarounds, in companies that have problems. While Longley is a sound firm technically, it needed more finance and its financial controls were wanting.

"They had no choice. It was them that came to us. Longley had lost £15 million over the past 10 to 12 years, not having made a profit in years. Financially it needed beefing up. If nothing had been done, in 12 months Longley would have had problems."

Alan Mackinnon, Longley's finance director, joined from Wiltshier 18 months ago.

Longley's current projects include the construction of the £13 million Seed Bank at Ardingly for the Royal Botanic Gardens and the £5 million refurbishment of the Queen Anne building at the Royal Naval College, Greenwich.

Problems at Longley came to a head with the Chelsea Village Hotel setback. This was part of an extensive redevelopment for Chelsea Football Club. Ken Bates, chairman of Chelsea Village, owner of Chelsea Football Club, determined Longley's contract before work was completed.

"The Chelsea problem was a big catalyst in Longley's problems," said Gurner. "It was a big blow to them. It was a prestigious problem. We hope to settle things amicably."

Longley first started at Chelsea as its contractor for a £3 million car park. After finishing this six weeks early, Longley was offered the £3 million North West Stand which was an infill project. Next, Longley negotiated the £26 million Southern Complex contract which involved the construction of Chelsea's new South Stand along with a hotel, maisonettes and flats built behind it.

Oliver Longley said: "We finished the new South Stand, but the Southern complex contract was determined because the hotel and maisonettes were not completed. We sought proper extension of time, but it hadn't been granted. He [Bates] thought he could make a better job completing it himself. He did and we have got practical completion.

"In reality there was very little left to do. We had done 95 per cent of the work. There was just the plant room, some areas to the rear of the hotel and the ninth floor, which is Ken Bates' penthouse flat, to complete."

Chelsea Village's Alan Shaw said: "The contract was determined because we were frustrated by the inability of Longley to deliver to an agreed timescale. We have no regrets at what we did, it was entirely justified. Longley has had a change of management - we have met Alan Mackinnon and are trying to resolve our differences amicably."