The Texan tycoon who led the bankrupt prison-builder ISG to bankruptcy has finally spoken out about the collapse of the company, with details emerging of a debt of $1 billion his firm owes Goldman Sachs.
William Harrison III, former chairman of the construction firm, said that he was “devastated”, for the 2,200 workers who lost their jobs in what has been dubbed by some as the largest collapse in the industry, since the fallout from the outsourcer Carillion, in 2018.
ISG, a company that also built schools and offices in Manchester and Wales, and which had a projected turnover of £2.2billion in 2022, contacted EY administrators nine days earlier. Cathexis Holdings was the owner, Harrison’s Family Office, whose portfolio includes data centre developer Yondr, and Irish engineering company Jones Engineering that employs 4,000 employees.
Harrison said: “I’m devastated for all the people who have been laid off and the supply chain, as well as our clients who are dependent on their services.” The collapse of ISG is the worst construction-related disaster since Carillion in 2018.
ISG’s demise was caused by Cathexis’s liquidity crisis, which began last year when Goldman refused to extend any further credit lines and told it to start paying off debts exceeding $1 billion. Cathexis had accumulated a debt of over $1 billion, which was secured by the other companies within its portfolio.
Goldman was reportedly frightened by the ballooning loan-to value ratio in its lending to Cathexis a year earlier. City sources claim that the Wall Street lender began discussions about repayment, either through refinancing the loan with another bank, or selling Cathexis’ assets.
Cathexis chose to sell its portfolio companies, including ISG and Yondr. ISG had a deal in place for a sale this summer, but the deal fell through due to a funding dispute. Cathexis hired Citi bankers to sell Yondr. In the next few weeks, an auction will be held for the UK-based data centre company.
Yondr stated that the events of last week did not impact its current sales strategy, which was “accelerate” growth. The company said that it was exploring ways to increase its growth by gaining access to more capital.
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