Tag Archives: liquidity

Now Ennstone’s wholly-owned American subsidiary files for protection under Bankruptcy Code

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Ennstone Group has just announced that the Board of Ennstone plc was informed today (25th February) by the directors of Ennstone Inc, the Group’s wholly-owned US subsidiary, that Ennstone Inc has now filed for protection from its creditors. This has been done under Chapter 11 of the United States Code (the ‘Bankruptcy Code’). The affairs of Ennstone Inc will therefore now be managed in accordance with the provisions of the Bankruptcy Code.

Although the holding company of the group, Ennstone plc, has some contingent liabilities in relation to the business of Ennstone Inc, neither of the Group’s UK nor Polish businesses – Ennstone Johnston and Ennstone Thistle with its Polish subsidiary Ennstone Sp. z o.o – have any such liabilities or any trading relationship with the Group’s US operations. Both of these businesses continue to operate normally and to perform satisfactorily in the difficult trading environment.

These operations are expected to have sufficient cash headroom through to the end of March 2009, on the basis of the continuing support of their UK and Polish lenders and finance lease providers.

The Group continues to work towards an agreed restructuring with its UK lenders within a timeframe expected to secure the future of the UK and Polish trading companies.

Ennstone Group will make a further announcement in due course.

Strong community support for Mid Argyll Pool amid fears of closure

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Users of the Mid Argyll Pool, currently threatened with closure because of a serious cash flow problem, have been invited to send representatives  to a Board meeting which is being held at 7.30pm on Thursday evening (26th February). Representatives have been selected and will be attending, as will Mid Argyll’s three Councillors, Douglas Philand, Donnie MacMillan and Alison Hay.

Lighthouse Caledonia announces asset sales and refinancing

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Lighthouse Caledonia has announced today (10th February) a series of actions designed to address what it describes as its ‘constrained liquidity situation’. It is:

  • selling assets and biomass
  • agreeing refinancing of tis long term debt with its major lender
  • converting its accrued short term debt into long term debt with the agreement of a major creditor
  • agreeing the writing down of a proportion of its accrued short term debt with the same creditor

The immediate concern in Argyll, host to several of the Lighthouse Caledonia businesses, is with the proposed sale of assets and biomass – so here are the relevant deails announced by the company. It proposes to:

  • sell its Loch Seaforth site to Marine Harvest for £2.35million gross
  • sell its Loch Eriboll site to Scottish Seafarms for £0.5million gross

The sale of these assets will reduce the company’s harvest volume from 25,500 gwt to 23,500 gwt for 2009.

The company then proposes to sell biomass at Ardyne and Strone to EWOS for £2million gross. This is proposed under the following terms described by Lighthouse Caledonia:

  • EWOS will purchase the biomass at a fair value, feeding the fish to harvest weight and covering the feed cost and mortality risk
  • Lighthouse Caledonia will take the other associated costs and will buy the biomass back from EWOS at the point of harvest and at a pre-defined price. 

The proposed refinancing arrangements depend upon a successful  equity issue of 150million Norwegian Kroner. The Company is seeking to raise new equity of 150-200million Norwegian Kroner (NOK) through what it describes as ‘a private placement’ with existing shareholders and new investors. 

The application period for this will be from today – 10th February – to 13th February 2009 at 18.00 hours Central European Time (CET) and the period may close earlier or be extended at the Company’s discretion. The subscription price will be NOK 0.10 per share and the minimum subscription amount in the private placement will be NOK 500,000.

Should this equity issue succeed, the agreed refinancing arrangements include:

  • extending the maturing of its long term debt from 5 to 8 years
  • reducing its long term loan from £20.6 million to £15.1 million through the sale of assets and through debt repayment  with semi-annual instalments of £1.07 million – the first payment being due on 3rd March 2010
  • adopting a new convenant structure described as having: ‘…minimum equity ratio of 35% and NIBD/EBITDA by Q4 2009 of max 4.5x based on EBITDA for the last 3 quarters in 2009 annualised’

In the restructuring of its short term debt the company has made the following arrangments with a major creditor:

  • to write down £1million of accrued short term debt
  • to convert £3.6million of accrued short term debt to a subordinated loan on the same terms as the restructured long-term loan facility from the main lender which is described above

The company’s announcement contains other regulatory and historical financial performance details but the above is a summary of the key actions it is proposing now to take.

Clearly what is now crucial for the company is the success of the equity issue open for subscription from today until 18.00 CET on Friday (13th February). As For Argyll has reported within the last few days, Lighthouse Caledonia has said that it will make an announcement on or before Monday 16th February. This announcment wll be dictated by the results of the equity issue. Matters wil now be resolved quickly one way or the other.

The news gets grimmer for Argyll’s four Ennstone quarries

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The Ennstone Group has just (28th January) announced that it has today asked for a suspension of the trading of its shares on the London stock exchange – with immediate effect.

In the USA, Ennstone Group’s cash position is still critical. Its US subsidiary, Ennstone Inc., has now suspended payments of interest charges and finance lease repayments to its US lenders. The Group says that discussions with these lenders are continuing and proposals have been made which may result in a solvent solution in that country. This though depends on the response of the US lenders who are still considering the proposals put to them. Should they either reject the proposals or fail to come to a decision by the end of January 2009, Ennstone, Inc.’s liquidity position will become critical.

On 19th December 2008, Ennstone Group announced that it was continuing to negotiate on proposals which it had received for the sale of the Group as a whole – or for a substantial cluster of its UK businesses. These proposals involved a significant equity investment and a refinancing of the Group.

However, the group says that recent developments indicate that there is now a diminished likelihood of it successfully concluding a solvent proposal for Ennstone plc and for the Group as a whole.

It emphasises that it is continuing to manage its cash position rigorously and has made a number of disposals, all reported by For Argyll,  of non-core assets which have provided additional short-term working capital in both the UK and US.

Ennstone reports that its UK lenders remain supportive of the UK businesses and that discussions are continuing to seek a solvent solution for Ennstone’s UK and Polish subsidiaries. This is expected to be announced in the near future and this is the announcement that will impact upon the position of the Argyll quarries.

The Ennstone Group Board believes that it has sufficient liquidity to the end of March 2009 provided that its UK lenders maintain and develop their current facilities. This would also depend upon the continuing support of the Group’s lease finance providers and other stakeholders.

The Group’s UK businesses, Ennstone Johnston and Ennstone Thistle – operator of Argyll’s four quarries at Furnace, Dunbeg, Benderloch and Bonawe – and its Polish subsidiary Ennstone Sp. z o.o., have continued to perform satisfactorily in the current economic downturn.

The Board anticipates that they would be in a position to continue to continue to trade satisfactorily following any required restructuring of the Group.

The Group’s decision to ask for the suspension of its shares from London Stock Exchange trading is a result of the need for space for clarification of any potential transaction and of the Company’s financial position.

The group will make a further announcement in due course but the nail biting at the Argyll quarries continues.

Prudence to print pounds

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If it wasn’t so terrifyingly serious it would be almost endearing – like the sort of solution to insolvency that any inventive small schoolboy like William the Bad would have taken, courtesy of his John Bull printing set.

Andy Mettler Wikipedia CommonsGordon Brown is seriously considering printing money – increasing the money supply. They call it ‘quantitative easing’.

This is how it works. There’s an important national company in trouble – or it could even be the banks needing yet more funds. The Government could buy the company, taking it into state ownership or buy the banks’ ‘toxic debts’ for the taxpayer. These are the debts that are probably irrecoverable.

The Government would have to borrow money to do any of these things – and the UK’s borrowing debt is already far beyond any historical precedent.

But there is another way. The Government could simply roll the presses of the Royal Mint for long enough to produce the required amount to buy the troubled company or fill the banks’ coffers again in exchange for unstable debts.

The state would own whichever, possibly worthless, commodity it had bought – with no increase in borrowing to pay for it. The company or the banks would have the cash – perfectly acceptable currency. They would use this cash for some purpose which would add to the money supply in general circulation. In the case of the banks, this would be money to lend – to small businesses and homeowners in loans and mortgages.

Neat, isn’t it? And it is this ‘solution’ that Dear Prudence is currently considering.

So what’s the problem? If the state were a bank – which it virtually is these days – the problem would be its ‘liquidity ratio’. When the largely unregulated banks recently collapsed, they did so because of virtually total easement on the requirement to lend against only a safe percentage of assets. So when borrowers defaulted and the pyramid of hedging imploded, they were themselves in irrecoverable debt. They had no liquidity.

If the state prints money it is in effect knowingly taking the same risk the banks took with such disastrous consequences. There will be no assets to set against the new money printed. It’s a confidence trick which, if the truth be told, all money is anyway. Within safe limits, however, confidence generally holds and we get by.

Printing money is the most desperate last throw for a state to make. It brings us closer to hyperinflation than we should sanely consider. In the 1920s, post First World War Germany increased the money supply, hit hyperinflation -  and there is living memory in the UK of German citizens literally barrowing Deutschmarks to pay for the smallest item of food. In the 1970s Argentina took the same route and got to the same place. And in the 1990s, Japan – as Brown may now do, refused to admit the lessons of history.

An increasingly possible nightmare is that Brown may print money, fatten the money supply and then call an early General Election, maybe in June. He would hope to win – or to lose narrowly – with the country gulled into a deceptive sense of relief in the greater availability of worthless money. And he would hope to win before the foundationless edifice comes tumbling down. But of course he would also hope that this wouldn’t happen. Every gambler does.

If the Prime Minister prints money, whichever party wins the election the country wll be stuffed.

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Troubled Ennstone announce appointment of new Executive Chairman

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The Board of the troubled Ennstone Group, operator of four Argyll quarries – at Furnace, Dunbeg, Benderloch and Bonawe – have this morning (5th January 2009) announced that Julian Cooper has joined the Board with immediate effect as Executive Chairman.

Mr Cooper is a Chartered Accountant and brings to the Board his considerable experience in a variety of executive management positions.  He is a senior partner of consultants, MPC Partners LLP and is a former partner at Arthur Andersen. This was once one of the Big Five international accountancy firms until its collapse in 2002, mired in the Enron financial scandal in the USA.

Julian Cooper succeeds Graham Brown who will remain on the Board as a non-executive Director, ensuring a smooth transition. The Board of Enstone Group wish to thank Mr Brown for his service to the Group as Interim Executive Chairman.

The coming days and weeks will be critical to Ennstone in its admitted difficulties, as For Argyll has reported, so Mr Cooper joins at a time when all of his skills and experience will be immediately needed. It is in Argyll’s interests that he succeeds.

Argyll concerns deepen as troubled Ennstone sees director resign from Board

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Ennstone today (29th December) announced, without explanation, the resignation of non-executive director, Tim Ross from the Board of Ennstone Group, to take effect from 31st December 2008.

For Argyll has regularly covered recent developments in Ennstone’s situation which are of concern in Argyll. The Groups Scottish wing, Ennstone Thistle, operates four Argyll quarries – in Furnace, Dunbeg, Benderloch and Bonawe.

The Group recently sold off a major asset – its Concrete Products business – without making any significant improvement to its trading position and admits that January 2009 will be a testing time.

Ennstone problems deepen, with four Argyll quarries: Furnace, Dunbeg, Benderloch and Bonawe, under threat

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Ennstone Thistle, the Scottish wing of the troubled Ennstone Group, operates four quarries in Argyll – at Furnace, Dunbeg, Benderloch and Bonawe.

Yesterday (22nd December) Ennstone announced that it has sold ‘the trade and assets of Ennstone Concrete Products Limited’ (aka Concrete Products) to FP McCann Ltd. This is its precast concrete products business, and after its disposal, Ennstone will no longer have any involvement in the ongoing manufacture of concrete products.

As part of the disposal agreement, Ennstone has agreed a long-term supply of aggregates from certain of its quarries to the sites now disposed of and to a further FP McCann site. This agreement secures this particular market for aggregates from specific quarries.

However, when some debts were discharged within the sale agreement, only £3.3 million of the £8.4 million cash and debt free deal for Conrete Products remained to the Ennstone Group. These proceeds were required by its Board, in the absence of any additional credit, to provide short-term cash to meet the Group’s working capital needs.

Without the proceeds of this sale, Ennstone admits that:  ‘the Board is of the opinion that the Group would not have had sufficient liquidity to meet its financial commitments as they fell due.’  It says that in such circumstances: ‘the Board would have had to appoint administrators, liquidators or receivers’.

This is no more than a temporary respite. Regardless of the modest proceeds from this asset sale, the Group’s Board confirmed that, if no offer for the Group is made, the Group will require substantial additional funding. It will also need to reach an agreement with its debt providers on the restructuring of its existing facilities during January 2009.

Should these arrangements noit materialise, Ennstone is saying that: ‘it will not have sufficient liquidity to trade as a going concern and the Board will be forced to seek the appointment of receivers, administrators or liquidators’.

Given that the Group  – and those who, in different conditions, might have made an offer for it – are likewise finding finance hard to come by, the reality is that the company is looking at the likelihood of this outcome in January at the latest.

More bad news for Argyll jobs – Lighthouse Caledonia in liquidity difficulties

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Lighthouse Caledonia, the company now owning the seafood processing plant at Cairndow on Loch Fyne (formerly Pan Fish) and which has recently closed its plant outside Stornoway in the Western Isles, has admitted to pressing liquidity problems.

In a press release issued on 16th December 2008, the company says: ‘During 2008 Lighthouse Caledonia ASA has been through a phase of restructuring to ensure the long term growth of the company in Scotland. Necessary investment needs and working capital requirements related to these processes have, as communicated in the third quarter 2008 report, generated a financing need that is planned to be solved through an equity issue before the end of the first quarter 2009.

‘A recent reduction in credit terms from one key supplier – with credit terms being reduced from 90 to 30 days – caused by the unresolved long-term financing of the company, has resulted in a constrained liquidity situation. Lighthouse need to resolve the liquidity situation short term and now considers all options to sustain its operations. The main lender, owners, potential investors as well as the main suppliers may all be part of a solution to the constrained liquidity situation and the long term financing and ownership of the company.

‘The Board of Directors in Lighthouse Caledonia ASA has decided to freeze payments due from the company until the liquidity situation is resolved. The company will maintain a close dialogue with all involved parties to seek to resolve the situation’.

Decoding this careful and necessarily self-protective text, the situation is clearly a serious one. It is accelerated by the current credit crunch. In a bitter double-jeopardy, potential solutions will find the same scarcity of credit prejudicing their chances of success. This is not good news for jobs in Argyll.

Ennstone, operator of four Argyll quarries, said to be ‘troubled’

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Shares in Ennstone, the company currently operating Argyll quarries at Furnace, Dunbeg, Benderloch and Bonawe, dropped sharply yesterday (16th December 2008) when it admitted it was in advanced talks to sell assets to meet cash obligations in the UK and the USA.

Ennstone runs a range of quarries, concrete plans and contract operations in the UK, Poland and the USA. It has said that it is now in breach of its USA banking facilities and, through a reciprocal arrangement, also in breach of its UK banking facilities.

This statement was made after the group suspended interest payments and finance lease repayments on its American banking facilities because of what is described as a ‘deteriorating cash position’.

The worldwide recession will also make asset disposals difficult as credit to fund potential buyers will be hard to find.

Ennstone says that its British and American financial sector creditors are considering whether to waive the breaches incurred. The company is looking to arrange restructuring in the USA and rescheduling specific debt repayments in the UK.

It has experienced a period of consistent expansion and acquisition. It operates in Scotland under the name Ennstone Thistle, employing over 400 people at 30 locations. It is one of the largest producers of aggregates, sand, gravel, asphalt and ready-mix concrete in the country.

Last month (November 2008) Ennstone announced that it was cutting around 1,200 jobs across the UK, saving £2 million in annual costs.