BRIDGEWATER Paper Company in Ellesmere Port collapsed because it was unable to renegotiate its energy contract after incurring years of “onerous” charges, according to administrators.<\/p>\n
The recycled paper mill, which employed 295 staff, was placed into administration on February 2, at the request of the company’s directors, and production was ceased six days later. <\/p>\n
Subsidiary Cheshire Recycling was sold to\u00a0Palm Recycling Ltd for \u00a3800,000\u00a0in February, safeguarding 50 jobs.<\/p>\n
The company had been trading at a loss for many years and was being supported by\u00a0Canadian parent company AbitibiBowater.<\/p>\n
Management accounts for the year to the end of December show the company had an annual turnover of \u00a378.2m but made a gross loss of \u00a310.6m.<\/p>\n
The group commissioned the building of a CHP plant on site by entering into an agreement with energy supplier Npower in 1998 to build and operate the CHP plant for 15 years.<\/p>\n
In their report, administrators at Ernst & Young said the\u00a0contract with Npower “resulted in onerous energy costs for the group”.<\/p>\n
The report said: “At peak commodity prices in 2008\/2009 the group incurred around \u00a32.2m in energy costs a month.<\/p>\n
“This was significantly above market value and contributed to the gross losses incurred.”<\/p>\n
The report added that the group had been negotiating with Npower for 18 months to vary the terms of the license and reduce its energy costs, but that it was unable to conclude a deal.<\/p>\n
The group was also being impacted by pressures in the news print industry – it had been trading at a loss for a few years and last year suffered a 10% price reduction, as a result of customer pressure, which further affected trading.<\/p>\n
The company, which had no direct bank borrowings, owed around \u00a380m to non-preferential creditors. It also owed around \u00a390m in inter-company claims and \u00a3300,000 to preferential creditors for employees salaries and pensions contributions.<\/p>\n
The mill, which has a production capacity of 220,000 tonnes a year, sold paper made here and in Canada.<\/p>\n","protected":false},"excerpt":{"rendered":"
BRIDGEWATER Paper Company in Ellesmere Port collapsed because it was unable to renegotiate its energy contract after incurring years of \u201conerous\u201d charges, according to administrators.<\/p>\n","protected":false},"author":24,"featured_media":1023489,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"coauthors":[],"class_list":["post-23489","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-deals"],"yoast_head":"\n