North-east housebuilder Stewart Milne Group (SMG) has collapsed into administration, with the immediate loss of 217 jobs.
The firm has several partly-completed developments across Tayside.
The administration means hundreds of other sub-contractor jobs are now at risk.
SMG’s bank rejected two offers for the business and then pulled the plug on funding.
Stewart Milne on administration
One of these offers is believed to have come from the firm’s 73-year-old owner and founder, Stewart Milne.
He said he was “devastated” by this “totally unexpected outcome” of the sale process.
Mr Milne also said he was “struggling to accept it, given the profound impact it will have on employees, sub-contractors, suppliers and customers”.
He added: “Stewart Milne Group was up for sale and, following significant interest, two bids were submitted.
“The bank has not accepted either bid and withdrawn its funding, which left the directors with no option but to appoint administrators.
“I tried everything I could to find a way to achieve a better outcome for the business and the people who depend on it.
“One of the bids could have delivered a comparable, financial return to administration and, crucially, allowed the business to continue to operate, safeguarding hundreds of jobs and protecting livelihoods.”
112 employees retained
Insolvency experts from Teneo Financial Advisory have been appointed joint administrators for SMG and six of its subsidiaries.
The subsidiaries include Stewart Milne (Arbroath) Limited, Stewart Milne Homes (Auchterarder) Limited and Stewart Milne Homes (Kirkton) Limited.
Teneo said a total of 112 employees were being retained across the group for now.
The businesses are being wound down and the administrators urged anyone with an interest in SMG’s Scottish developments to “get in touch”.
Where can customers of Stewart Milne Homes turn to for more information?
There was no further information on what the administration means exactly for those who have invested large sums of money in homes that are yet to be built.
Teneo has Scottish offices in Edinburgh and Glasgow, which can be reached by calling 0131 619 2300 or 0141 619 1600 respectively.
The devastating jobs blow comes just hours after it emerged SMG subsidiary Stewart Milne Homes North West England had filed notice of its intention to appoint an administrator south of the border.
SMG – founded in 1975 – has its headquarters in Westhill, Aberdeenshire. It also has offices in Edinburgh, Glasgow and Manchester.
The group supports a workforce of more than 1,000 people, including sub-contractors.
It has more than 350 directly employed workers on its payroll.
SMG’s current projects include sites in Aberdeen, Stonehaven, Arbroath and Dundee
SMG’s housebuilding divisions usually have up to 35 active sales sites at various stages across Scotland and north-west England.
Current projects include Dunnottar Park in Stonehaven, Monarch’s Rise in Arbroath, Ballumbie Rise in Dundee and Hunter’s Meadow in Auchterarder.
Future plans potentially include 160 new homes in Newburgh, Aberdeenshire.
SMG put itself up for sale in April 2022.
It said Mr Milne wished to spend more time with family and friends, splitting his time in homes in Aberdeen, Perthshire, Turkey and Florida.
His luxury mansion in Bieldside, Aberdeen, also went on the market, with a £7.5m price tag. It is still up for sale.
A weak housing market and wider economic woes put the brakes on the sale process for SMG, as well as Mr Milne’s retirement plans, after the mini-Budget introduced during Liz Truss’s brief reign as prime minister.
Last July, SMG said market conditions had improved to the point where it was speaking to suitors again.
That news came as SMG reported its best annual profits for almost a decade.
A gain from the sale of a £100m turnover timber systems business in December 2021 and “significant efficiencies” drove profits to a level not seen for more than seven years, the company said.
Group accounts for the 12 months to October 31 2022 revealed pre-tax profits of £16.5m from continuing operations, following losses totalling £13.1m the year before.
Chief executive Stuart MacGregor and chief financial officer Fraser Park said the company’s new homes in Scotland and north-west England were selling well.
It is nearly 50 years since Mr Milne, who was chairman and remains on the board at Aberdeen Football Club, founded Stewart Milne Construction.
The business had just 30 employees and turnover of £1m in its first year.
Its return to profitable trading in 2021-22 followed the adverse impacts of Covid.
And in 2021 its flagship housing project, the £800m Countesswells scheme in the west of Aberdeen, was rocked by developer Countesswells Development Limited (CDL) – a wholly-owned subsidiary of SMG – collapsing into administration. CDL’s directors blamed disruption caused by an oil and gas downturn, as well as the Covid-19 pandemic.
Announcing SMG’s collapse into administration, Teneo said the group had – like many in the housebuilding sector – faced significant challenges over the past few years.
It highlighted economic uncertainty due to rising interest rates, increasing cost pressure and an associated reduction in consumer confidence.
Administrators looking at ‘all options’ for SMG’s housebuilding projects in Scotland
SMG’s directors had explored “multiple options” to secure the future of the business, Teneo said.
The global business adviser added: “Unfortunately, this did not result in a transaction and other options to restructure the group were, ultimately, not viable.
“The directors, therefore, took the difficult decision to place certain group companies into administration, including each of the Stewart Milne companies that operate active development sites in Scotland.”
Adele MacLeod, of Teneo, said, “The downturn in the UK housing market combined with an extensive sales process not resulting in any viable offers has, ultimately, led to the need for the directors to place Stewart Milne Group Limited and some of its subsidiaries into administration, regretfully with some immediate redundancies.
“We continue to assess all the options in respect of the group’s Scottish development sites and encourage any party with an interest to get in touch.”
Teneo said the administrators were communicating with all employees affected and “working closely with the Redundancy Payments Service to support employees in recovering any statutory entitlements to which they may be entitled.”
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