State Government officials are keeping a watching brief over the future of embattled chemicals manufacturer and distributor Penrice Soda which went into administration earlier this month.
A government spokesman said agencies such as its Department of Manufacturing Innovation Trade Resources and Energy (DMITRE) and Renewal SA were represented at Monday’s creditors’ meeting and are “working through the voluntary administration process in the hope that the operations can continue”.
The company faces debts of around $200 million and hasn’t made a profit for years.
It owns an ageing processing plant at Osborne, one of the oldest chemicals manufacturing sites in the state, on the edge of the Port River.
Penrice’s only valuable asset is a limestone quarry at Angaston which has attracted some buyer interest.
The State Government told InDaily it was conscious of environmental concerns relating to the Osborne site.
“DMITRE will continue to ensure all the regulatory requirements are maintained during the voluntary administration and operations continue in accordance with the environmental obligations under the Mining Act,” a government spokesman said.
“The administrators have informed creditors that they have secured some short-term funding to provide working capital and are attempting to maximise the opportunity to either maintain the business or sell it as a going concern.
“The government will continue to monitor developments in the hope that the business can continue as a going concern as this remains the best way to secure the jobs of the current workforce at Osborne and Angaston.”
Industry observers, however, are less optimistic.
“I can’t see it surviving as a processor; the quarry is the only saleable part of the business,” one creditors committee representative told InDaily on the condition of anonymity.
“Nobody wants the Osborne site. It dates back to 1935 and comes with a heft liability for clean up.”
Creditors who attended the first briefing from Penrice’s appointed administrators were given little joy Monday as they were told of debts that could reach $200 million.
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 Tuesday.
“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.
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 to tip more money in to keep the business running.
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