Wrekin Construction empire built on ВЈ11m ruby gemstone

When David Unwin arrived as Wrekin Construction’s white knight two years ago it wasn’t £11m of cash he was wielding to save the stricken Shropshire-based group – as has been commonly assumed – but a giant gem stone with “a fair value of £11m”.

Wrekin bought the sparkler вЂ” known as “The Gem of Tanzania” — in a deal that saw the firm issue ВЈ11m-worth of new preference shares and handing them over in exchange.

In other words, there was no new money to turn around the company’s fortunes. Wrekin had racked up a loss of ВЈ9m in the previous year as a result of a disastrous expand-at-all-cost policy by the former owners.

However the ВЈ11m gem was a new asset that helped to transform the appearance of Wrekin’s balance sheet from an ВЈ8m liability (31 March 2007) to net assets of ВЈ6m (31 December 2007) – even though the only material difference was the ВЈ11m-worth of preference shares that had been issued.

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As one creditor affected by Wrekin’s collapse into administration told CJ: “Preference shares can be called in at short notice. It’s no wonder the banks were worried.

“We were as well. Wrekin’s credit rating had dropped from £500,000 before Christmas to £100,000, that’s what we heard from the credit rating agency we use.

“I was also talking to three other subcontractors who’d not been paid by Wrekin since before Christmas and I was aware of two County Court judgements against Wrekin in recent months.”

With Wrekin in urgent need of saving two years ago, the transformation was achieved when the glorious ruby gemstone appeared.

Its validity and worth came guaranteed, according to Wrekin, by a professional valuer at the Instituto Gemmologico Italiano, based in Valenza, Italy, on 31 August 2007.

Asked if it had ever sat innocently on his desk as a paperweight, Wrekin’s joint managing director Peter Greenwood said: “No.”

Has he ever even seen this elusive dazzler? “No,” again is the reply.

Greenwood says the Gem of Tanzania is tucked away in a safe deposit box in the UK.

Could the valuation be all a load of fiction? Apparently not as Wrekin has had it re-valued annually.

Why couldn’t it have been flogged off and the £11m used to save Wrekin and all its employees?

The answer is that the ВЈ11m-worth of preference shares had already been issued against its value.

Wrekin's saviour two years ago was stated at the time as being London and Middle Eastern Group. However that name never showed up in Wrekin’s subsequent accounts.

David Unwin owns London and Middle Eastern Group and operates out of an office in Lows Lane, Stanton-by-Dale, Ilkeston, Derbyshire.

Unwin actually bought Wrekin through one of his other vehicles, Tamar Group.

Tamar Group owns a whole string of operating companies:

Tamar Land and Property London & Middle Eastern Stanton Recycled Aggregates HCL Equipment Equatrak (UK) Midland Land Recovery

The ultimate controlling party of Tamar is David Unwin.

On 1 January 2007 Tamar Group had net assets of ВЈ430,000 but ended the year with a net debt of close on ВЈ16m.

Contributing to Tamar’s soaring debts were:

cash outflow of ВЈ2.9m; acquisitions (excluding cash and overdrafts) of ВЈ8.8m; other non-cash changes of ВЈ4.4m.

Tamar’s turnover (12 months to 31 Dec 2007) was £38m (figure in 2006: £16m) and this produced a pre-tax profit of £3.3m (previous year: £350,000).

The gemstone makes an appearance in Tamar’s accounts, a revaluation being said to have put its worth at £10.7m.

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