Administrators have revealed an offer for the majority of Zentia's business and assets, raising hopes that the historic Gateshead manufacturer could be bought by a new owner weeks after it went into administration with the loss of 170 jobs.
Background and collapse
The ceiling manufacturer, which had traded for more than 101 years, closed its Gateshead operations in June after being severely affected by challenging conditions in the building and construction sector, including high energy prices and lower sales. The company, a former North East Business Award winner, employed scores of people across two Gateshead bases, making suspended ceilings and working with distributors, contractors, architects and interior designers across the UK.
Before administrators Will Wright and James Lumb from Interpath were appointed, directors had tried to address the firm's financial position, including securing a £6.5m cash injection by the shareholder and exploring options to sell the companies. When those efforts failed, production immediately came to an end, resulting in 170 redundancies.
Financial details
Fresh documents filed by the administrators show that Zentia, originally incorporated on August 7, 1925 under its former name Armstrong Cork Company, collapsed owing more than £45m. The statement of affairs shows assets with a book value of £24m, including machinery worth £14m and inventory worth £9m. Estimated total assets available to creditors total £2.59m, while estimated total debt is £45.9m, including £20m relating to creditors and £16m relating to unsecured creditors. A six-page list of trade creditors shows debts totalling around £4.56m.
Potential deal
More positively, the report reveals that an offer for the majority of the business and assets of the company (and business and assets of Zentia Profiles) was received from a third party and, following negotiations, is at a level which BNP Paribas Commercial Finance Limited, Aurelius and Lloyds Bank Plc are all supportive of.
The report says: “It is anticipated that we will agree heads-of-terms and enter into an exclusivity agreement with the third party over the forthcoming days and then look to progress the transaction to completion.”
It is understood that the administrators have now entered into an exclusivity agreement with a potential purchaser, with the aim of a deal being closed in the weeks ahead. Whether this could result in reopening of the two Gateshead plants and the rehiring of staff who lost their jobs is yet to be seen.
Chain of events
The report details the chain of events leading up to the company ceasing trading. It had been renamed from Armstrong Ceiling Solutions after it was acquired by a German asset manager as part of a significant European deal. The report adds: “The company has faced significant headwinds over recent years since the acquisition, which included sales being adversely impacted by the well-publicised economic challenges facing the construction sector, as well as strong downward pressure on pricing and increased production costs.”
