Minister says Havelock only warned of cash shortage just days before collapse

Havelock
Havelock

The Scottish Government “did everything it could to help Havelock workers”, Kirkcaldy SNP MSP David Torrance says.

It comes after claims from Labour MP Lesley Laird, who said that Havelock owners Rcapital had been “knocked back” after it asked for money from Scottish Enterprise (SE) in April.

David Torrance MSP and Gordon MacDougall, Skills Development Scotland, Head of Operations, Fife and Tayside

David Torrance MSP and Gordon MacDougall, Skills Development Scotland, Head of Operations, Fife and Tayside

However, a letter from Jamie Hepburn, Minister for Business, Fair Work and Skills, states that Rcapital only told SE it was in trouble just days before the business went under.

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Mr Torrance said: “As soon as I was made aware of the situation at Havelock I contacted Jamie Hepburn for an overview of the Scottish Government’s involvement with the company and their plans to assist the workers affected.

“His response made it clear that the Scottish Government was not made aware of the full extent of the troubles the firm was having until just days before the company went into administration.”

The minister’s letter outlines what happened in the run-up to Havelock going into administration on August 1, making 247 workers redundant.

Mr Hepburn’s letter stated: “I met with senior management at the company in April this year when the company alerted us to a potential working capital issue which could require financial assistance from SE.

“Following these discussions, Rcapital agreed further investment in the business to overcome this immediate problem and began discussions with SE on a longer-term investment plan to finalise the purchase and upgrade of Havelock’s current premises.

“However, on 24 July SE was advised by Rcapital that there was an urgent working capital situation at Havelock that could mean that the payroll would not be met on 31 July and that the company had been put up for sale on 19 July.

“The notification provided to SE on 24 July was the first indication of this situation – despite there having been engagement with the company on a regular basis over a longer period of time.

“SE then had a more detailed conversation with Rcapital late on 25 July to confirm the scale of the issue. I was made aware of the situation on 26 July.

“Over the weekend of 27-28 July and on Monday 29 July, SE participated in calls with PwC, Rcapital and a company that had expressed an interest, subject to their undertaking due diligence, in purchasing the company.

“However, Rcapital was not willing to make investment into the business that may have sustained it over the period required for that due diligence.

“The lack of investment and exceptionally short time for funding decisions (48 hours) also made it impossible for SE to consider any funding proposition to Havelock International Ltd.”

The minister’s comments follow claims by Kirkcaldy and Cowdenbeath MP Ms Laird that Rcapital was forced to sink a further £3.2 million into the business over the past year after buying the firm in 2018.

She said: “They had approached Scottish Enterprise to request funding in April but according to Rcapital, were knocked back for reasons which I’ll be investigating.

“Last month it became apparent the business needed at least another £1.5m to stay afloat but Rcapital made the decision not to invest on July 28, stating the business was not viable.

Meanwhile politicians heaped praise on a jobs fair launched in the aftermath of Havelock’s collapse.

It was organised by Partnership Action for Continuing Employment (PACE), a Scottish Government initiative to provide free and impartial redundancy support and advice.

Mr Torrance said: “Many former Havelock employees have worked there for a number of years, some as many as 35 years.

“Therefore, the prospect of creating or updating a CV, completing job applications and interviewing for a position can be extremely daunting and intimidating.

“Speaking to some of those attending the event, it was heartening to see the level of optimism in the room – many of whom now have interviews or follow up meetings arranged with local companies.”

Ms Laird said: “Today proved to me that Kirkcaldy rallies at times of need and shows just how highly Havelock’s loyal and highly-skilled staff are thought of.

“I’d like to extend thanks to PACE and Skills Development Scotland for managing to organise this event at such short notice.”