Creditors who attended the first briefing from local manufacturer Penrice’s appointed administrators were given little joy yesterday as they were told of debts that could reach $200 million.
The local chemicals manufacturer went into administration earlier this month, bringing to a head a prolonged period of increasing borrowing and loudly voiced concerns from major shareholders.
Union officials are bracing themselves for another closure of a major manufacturer in South Australia.
“The administrators spent more than an hour and a half reading out the list of creditors, and I’ve never seen that before,” Australian Manufacturing Worker’s Union official Colin Fenney said today.
“They said that there was some hope that they could find a buyer for Penrice’s quarry at Angaston and that may generate some money, but the general view of the business as a complete going concern isn’t that flash.
“It’s hard to see someone coming in and buying the Osborne manufacturing operation when they would then be responsible for any clean up on the site if the business fails.
“In the meantime, our members are going to work and its business as usual while the administrators get their head around what’s gone on here.”
Penrice has been operating at the Osborne site since the mid-1930s, originally under the name of its first owner ICI.
It was carved off and re-badged as Penrice in 2008.
In 2013 Penrice shareholders successfully voted down executive pay packages forcing directors into a rearguard action to keep the activists at bay.
“Sadly for all concerned the complete demise of Penrice is now sealed,” one of those former shareholders told InDaily on the condition of anonymity, while the official line from administrators McGrath Nicol remained slightly more optimistic.
McGrath Nicol’s Sam Davies told creditors Monday it would be some weeks before a decision could be made on whether the business could continue to trade, but the numbers he outlined weren’t a good look.
“The debts are around $150 million and could be as high as $200 million,” he told media after the meeting.
Penrice owes its banks (NAB and Westpac) $111 million.
There are other private financiers owed millions on top of that.
Davies listed unsecured creditors who were owed $14 million.
Employee entitlements for Penrice’s 180 workers total $4.5 million.
Transport companies, utilities and others are owed money.
Scott’s Transport Industries says it is owed $1.43 million, energy distributor Envestra put in a claim for $56,100 and Momentum Energy for $648,000.
Ridley Corporation, which owns the salt pans that had been an essential component of soda ash manufacturing before Penrice closed down that part of its business, says its losses from frustrated contracts will amount to more than $27 million.
Davies told creditors many of the key suppliers to Penrice had stopped delivering.
He said he is looking for investors tip more money in to keep the business running.
The chances of that happening appear remote, given that in recent years 3,500 shareholders have lost over $125 million capital value in a business that’s operating out of an ageing plant at Osborne.
The former shareholder told InDaily the State Government had a responsibility to investigate how a local manufacturing business had managed to get into so much difficulty.
“Given the demise of Bridgestone, Holden, Mitsubishi, Penrice and the write-down of Elders something needs to be done urgently if South Australia is to survive.”
InDaily asked the State Government if it has had any discussions with Penrice or its administrators.
At the time of publication, we had received no response.
Creditors agreed yesterday to a 60 day extension of time for administrators and the next meeting is scheduled for 24 July.
