- Engineering support services group Redhall plans to seek damages after Vivergo Fuels repudiated a pipework contract.

Redhall said its subsidiary - Redhall Engineering Solutions - has been carrying out a contract to fabricate and install pipework for a new bio-ethanol plant on the BP Salt End site for the past 12 months.

Redhall said Vivergo - a joint venture between BP, British Sugar and DuPont - had repudiated the contract and brought it to an immediate end.

The workforce employed on the site have been transferred under employment protection (TUPE) regulations to Vivergo or any successor contractor.

Redhall says it has completed 78% of the original contract plus variations and there are currently approximately £14m of costs on the contract which are, as yet, unpaid.

The group says it intends to pursue the recovery of these costs vigorously plus damages.

The board had anticipated trading profits in the current financial year for the Vivergo contract to be in the region of £1.7m.

Redhall says that following the agreement of the new £25m banking facilities announced in January, the board can confirm there remains sufficient facility and covenant headroom to pursue its entitlement under the Vivergo contract as well as to fund the group's ongoing working capital requirements.

At 3:41pm [LON:RHL] share price was -12.5p at 123.5p

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