Acquisitions placed cash constraints on B3
A MIXTURE of declining sales and cash constraints caused by new acquisitions has been blamed for the demise of north Manchester-based B3 Cables.
A report to creditors by joint administrators into the collapse of parent company B3 Industries identified the “demands on working capital” placed on the firm following its acquisition of both West Yorkshire-based Tri-Wire and Crawley-based Blue Helix as one of “a number of contributing factors” to its demise.
Falling sales at its Blackley-based core Manchester Cables site and its Spanish arm (B3 Spain) also meant the firm had a high fixed overhead base which was draining cash.
B3 Industries only acquired Tr-Wire and Blue Helix in September and October 2011 respectively, but by November 2011 KPMG had already been asked by principal funder PNC to review the company’s cash position after being asked for more funds.
It had only become the firm’s principal funder in May that year, agreeing a £35m refinancing deal.
A statement of affairs prepared by B3 Industries’ CFO David Powell suggests that PNC is owed more than £30.8m by the firm. However, most of its subsidiaries including Manchester Cables (trading as B3 Cables), FTTX and German arm B3 Future Technologies GmbH are in administration and it is not known how much of the intercompany debts they owe are likely to be paid. Blue Helix and Tri-Wire have been sold back to their former owners for £50,000 and around £1.2m respectively.
The directors’ statement estimates that there may be a shortfall of up to £30.2m to PNC, though, and an overall deficit to creditors of £33.6m.
The B3 Group of companies was started in 2001 following the withdrawal of US-based Belden Cables from the UK market. The firm had owned the ex-BICC Cables site in Blackley, but a management buy-out team worked with Manchester-based Aston Ventures to buy the business.
It was owned by members of its management team and former Aston Ventures partners Paul Ruocco, Douglas Barrowman and Tim Eve, although the biggest single shareholder was ex-Tri-Wire boss Michael Walton with just over 20% of the shares.
