MORE than 320 jobs are under threat after a cash flow crisis forced an offshore fabricator into administration.

McNulty Offshore Contractors, based in South Shields, South Tyneside, called in administrators KPMG on Tuesday.

The company ran out of money after becoming embroiled in a payment dispute for building part of a gas module bound for Nigeria.

Julian Whale, of KPMG, said: "The administration comes as a result of a contractual dispute with a major customer.

"Due to cash constraints, McNulty Offshore was unable to continue with its contract.

"The company consequently faced a mandatory injunction, which it was unable to comply with in the short term.

"Last minute attempts to negotiate were frustrated and the directors felt they had no alternative but to appoint administrators."

McNulty is one of the largest employers on South Tyneside, with 240 full-time workers and 82 sub-contractors. Last year, it had a turnover of £35m. Mr Whale said: "We are looking to negotiate the completion of the gas module, which may enable the survival of the company or a sale of its business and assets.

"The workforce has been retained while we explore these options."

Billy Coates, senior organiser with the GMB union, said: "Although the yard has plenty of work and future orders, there is obviously a problem with cash flow, which has led to the administrators being called in.

"This is the worst possible news for our members working on the river, on the back of 80 redundancies at Swan Hunter.

"We hope the administrators can do everything to keep McNulty's open."

Tim James, Tyne and Wear policy manager for the North East Chamber of Commerce, said: "This is obviously a major concern for McNulty employees who now face an uncertain future.

"A sizeable number of companies that go into administration leave it successfully and the order book McNulty has should give it a fighting chance of staying in operation."