Pilkington’s debts were over £30m, say administrators

SWINTON-based tile making business Pilkington’s Tiles had racked up debts of over £30m prior to calling in administrators in June, and unsecured creditors owed almost £23m of this are unlikely to receive a penny.

A report prepared by joint administrators Paul Flint and Brian Green from the Manchester office of KPMG’s restructuring arm shows that sales of the company’s remaining assets are unlikely to raise enough to pay off the £7.4m owed to the company’s secured lender, GMAC Commercial Finance.

As a result, the £23m owed to trade creditors is unlikely to be paid, it says.

The firm’s collapse was blamed on deteriorating sales – particularly to trade customers in the housebuilding industry – as well as a decision taken by GMAC Commercial Finance to withdraw from the UK market.

The company, which employed 368 people when it announced that administrators had been appointed on June 14, had seen its sales fall from £35.8m two years ago to around £31.1m in the year to March 31, 2010.

Statements prepared by the firm’s directors say that once GMAC informed the business of its decision, it tried in vein to find other sources of funding and when none were forthcoming it began marketing the business for sale in April. However, none of the offers received would have allowed them to repay GMAC in full, which meant administrators had to be called in.

The report by joint administrators Paul Flint and  Brian Green said that they were “still in negotiations with a number of interested parties” over a potential sale of the group’s business and assets. The firm said that by July 15th it had received 11 firm offers – some for the whole of the remaining assets but others for certain trading divisions or machinery – and that it remained in talks with the various buyers.

Pilkington’s Group had been run by a three-strong management team led by chief executive Ray Tarr who led a buyout of the business in 2004.

The company sold ceramic tiles via major retailers such as B&Q and Terrazzo floor tiles under the Quiligotti brand that were typically used in commercial premises.

Some 200 former members of staff were laid off from its main manufacturing base at Swinton and from an Irish subsidiary as soon as the administration was announced.

Since then, 41 of the 45 staff working at a company-owned quarry at Poole, Dorset, have also been made redundant.

Currently, around 120 staff remain with the business to help guide it through the administration process.