LONDON: Paperlinx chief executive Andy Preece declares the paper merchanter has “drawn a line in the sand” after sinking more than $100 million into its struggling British operations for no reward over the past five years.
With most of the company’s British division now under voluntary administration, Mr Preece is confident the remaining Australian and Asian businesses will be unaffected as British creditors vie to recover their funds.
Joint administrators Matt Smith and Neville Kahn, of Deloitte UK, said 14 out of the company’s 19 British sites would be closed, with the loss of up to 693 jobs.
Paperlinx cited tumbling margins, legacy pension liabilities and the withdrawal of support from a credit insurer that meant suppliers would not be covered.
The issue was an irrecoverable cash decline which left the local directors unable to maintain their creditor obligations,’’ Mr Preece told The Weekend Australian.
He said while Deloitte was working “exclusively for the creditors to maximise returns’’, the banks had no recourse on the company’s assets elsewhere.
According to Paperlinx’s half-year accounts, the company carried $243m of borrowings, by way of “regional asset backed facilities’’.
Deloitte is looking at a UK-specific creditor pool,’’ he said.There is a high degree of financial separation between the Australian and NZ entities and the UK and European entities.
The businesses are well managed and highly profitable with sufficient liquidity and certainly no problem with covenants.’’
