Jobs saved as Metalrax sold out of administration
WELL-known Midlands manufacturing firm Metalrax, which went into administration earlier this week, has already been sold.
The Alvechurch firm – a niche supplier of specialist engineering and consumer durable products such as bakeware – announced that it was entering administration and that its shares had been suspended on AIM.
But, on appointment, administrators from KPMG sold the business and assets of the niche engineering group to a group of companies headed by Bowman Birmingham Limited.
Will Wright and Mark Orton from KPMG were appointed joint administrators to Metalrax Group,and its subsidiaries Metalrax Engineering Support Services Limited, Metalrax Specialist Applications Limited and Down & Francis Industrial Products Limited.
Following the sale the group will now trade as Arc Specialist Engineering and is backed by specialist private investors who have committed to a “significant investment” programme in the company.
In addition, as part of the transaction, solvent share deals were completed for two companies within the group, both of which were not affected by the insolvency process – Metalrax Housewares Limited, which was sold to Cable Capital Partners Limited and Metalrax Overseas Holdings Limited, which was also sold to Arc Specialist Engineering – securing a total of 387 jobs.
No figure has been put on job losses yet.
Wright said: “The group has experienced difficult trading conditions for some time, primarily within their consumer durables division. While the group’s management team has divested in recent years to focus upon niche areas, trading in this division has led to a significant drain on the group’s financial situation.
“Being able to sell the business and assets, together with shares in solvent businesses within the group, has been a great solution to securing a future for the business and more importantly just under 400 jobs.”
Alvechurch-based Metalrax said challenging trading and lack of funding were the drivers behind its slipping into administration and suspending its shares.
The group has been struggling more than six months and has tried to cut costs – last summer its consumer durables division lost a major contract with Morrisons.
In a statement Metalrax said: “Trading has been particularly difficult in the consumer durables division, particularly in light of the major contract loss announced on July 31 last year and results in this division have been materially below expectations.
“As a result, the sales volumes of the consumer durables division have fallen below expectations. Consequently the group’s funding availability, which is linked to the sales volumes and represents a large proportion of the group’s overall financing, has been significantly lower than expected.”
“The group is now experiencing significantly worsening working capital. Although the directors have sought further financing to allow the company to continue trading, such financing has not been forthcoming. It has therefore become evident that the only course of action available for the board is to place Metalrax and certain of its subsidiaries into administration.”
Last September Metalrax reported to the Stock Market that it was continuing to find trading conditions difficult. Revenues and profits were both down in the first half of 2012.
Investors reacted badly to the news with the firm’s shares down more than 18% in early trading on the day of the announcement.