(Trinidad Express) Stork Technical Services T&T Ltd has informed staff that, due to a “bleak future financial outlook”, it is considering a phased shutdown of its operations, beginning this month and to be completed by the end of the year, potentially leaving 389 employees without jobs.
Stork said this action became necessary due to total losses of $84.1 million since 2020, and unsuccessful attempts to sell the company.
On Thursday, Stork sent a letter to “All Employees, not covered under the OWTU bargaining unit agreement”, inviting them to engage in consultation for the potential closure of the company.
That consultation took place in the form of a town hall meeting yesterday.
According to a letter from Stork’s country manager Rubby Vidal Arizabaleta, the continued losses, including those up to July this year, are “not sustainable”.
“The cumulative and ongoing losses that the company is suffering have resulted in and continue to result in a severe and irrecoverable shortfall in liquidity. In the seven months YTD July 2024, the Fluor Group has been obliged to provide aggregate external cash funding of $77,361,093 by way of a loan of $36,565,293 (in February 2024) and a recapitalisation of the company of $40,795,800 (in July 2024),” it stated.
“In addition, based on the current forecast of ongoing losses into the foreseeable months it is anticipated that the company will require a further capital injection of approximately $44,000,000 in September/October 2024 in order to maintain sufficient liquidity in the company to meet its ongoing obligations,” the letter stated.
Vidal Arizabaleta said having regard to this, the future viability had to be carefully considered.
“Taking all the relevant factors into account, including the compounding losses over the past years, aggregating to $84,108,065 and the bleak future financial outlook, a phased closing down of the company’s entire operations is being considered and a plan in relation to this possibility has been developed,” it stated.
“The plan contemplates the phased closing down of the company’s operations in Trinidad and Tobago. In this regard, you are hereby formally advised of the possible closure of the Company’s operations, and the concomitant possibility of a phased reduction in the Company’s workforce toward to this eventual possible closure,” the letter stated.
On March 1, 2016, Fluor Enterprise Inc acquired, from the UK-based private equity firm Arle Capital Partners, the global Stork Group (including Stork Technical Services T&T Ltd).
No buyers interested
By 2021 Fluor, as part of its “new strategic direction” decided to exit
maintenance services in the Oil, Gas & Chemicals market and to divest the global Stork Group.
Initially, Stork planned a “One Stork Sale,” but finding it unfeasible, they opted instead to divest the regional components of the global business.
However, this strategy has not been successful for Stork T&T, and “currently no serious interest has been identified nor expected to become a reality.”
The letter stated that since 2017/2018, Stork Trinidad & Tobago’s engineering capabilities have not differentiated the company in a way that benefited from market growth or outperformed competitors.
“During the sale process of the LATAM business (of which Stork Trinidad & Tobago initially was part), large engineering project(s), which to date have incurred (and still incur) substantial losses (see table below for BP Ocelot project losses), have led to a carve out of Stork Trinidad & Tobago from the sale of Stork LATAM,” it stated.
The letter stated that the lack of financial results at Stork Trinidad & Tobago has led to multiple retrenchment processes over the years, but that these measures have not had a substantial effect on stabilising or improving financial performance.
“Market development in the core maintenance business in Trinidad & Tobago is under severe pressure from a volume, pricing and competition point of view. This has led and without action from the company, will continue to lead to negative financial results, as the available contracts to bid on have reduced significantly, the margins for which these get awarded have declined significantly and competition in the market is fierce,” it stated.
Stork stated that so far it has met its financial obligations to employees and creditors by substantial cash injections from its shareholder.
“The shareholder is considering, given its strategic rationale for the shareholder’s wider global business as defined in 2021, the lack of solid divestment perspective for its T&T business, the multi-year substantial negative performance and the lack of substantial market growth in Trinidad & Tobago, closing Stork Trinidad & Tobago, with a finalisation date of December 31st 2024,” it stated.
Stork T&T stated that given that the proposed course of action by the company is a complete closure of its business, “strictly speaking as a matter of law”, it is not obliged to pay any severance to the employees.
“However, as a gesture of good faith, the company will pay to each employee, an ex gratia payment, equivalent to the sum that they would have received in a retrenchment, under section 18(3) of the Retrenchment and Severance Benefits Act,” it stated.
An e-mail was sent to Vidal Arizabaleta for further clarification on the situation, but up to press time, no response was forthcoming.
