Klarius owed £64m when it went into administration – KPMG report
FAILED automotive parts business Klarius Group left unsecured creditors with debts of £64m when it failed in February.
Klarius, was billed as the largest European manufacturer of aftermarket car parts and made 90,000 parts from five manufacturing plants – three in the UK, one in Spain and one in Germany – which employed 1,200 people.
A creditors’ report by administrators at KPMG details the debts and says unsecured creditors owed £14.7m are unlikely to get a pay out. The secured lender, London-based Cable Finance, is owed £8.5m and may not recover its indebtedness, although there are book debts of £11.8m.
An earlier report into group company Quinton Hazell showed it owed unsecured creditors nearly £50m.
KPMG partners Paul Flint and David Costley-Wood were appointed to Quinton Hazell Automotive and the parent company, Klarius Group in February.
A former Klarius management team set up a new business, called Klarius Products, to acquire the Klarius emissions business based at Cheadle, Staffordshire, for £700,000. This deal saved 234 jobs.
According to the report, the group’s problems began when lender Burdale reduced its facilities at the end of 2011 and it spent 2012 trying to line up a new source of finance.
A £4.8m short term facility was arranged with Cable Finance which holds fixed and floating charges over the assets of the group and its Quinton Hazell subsidiary.
Due to growing cash pressures the group hired investment bank Houlihan Lokey in October to market the business but no investors could be found. KPMG Restructuring was called in and despite a number of expressions of interest only one offer was received for the Klarius emissions business.
No one was interested in Quinton Hazell in the UK, although one offer was received for the French operation. Five offers were received for Quinton Hazell’s intellectual property rights and its brand names which were sold to Bury-based auto parts firm Tetrosyl for £1.7m.
Cable Finance also acquired a £3.6m inter-company debt due to Klarius UK from Quinton Hazell Automotive taking its total exposure to £8.5m.
Klarius was formed in 2007 when chairman Tony Wilson bought the European division of US-based exhausts maker Arvin Meritor in a deal which was understood to have been worth £12m. In 2010 it acquired Leicester-based Quinton Hazell from US-based Affinia to increase it product range make efficiencies in terms of operations and deliveries.
