Chapter 11 for Ennstone Inc.

LATE last month Ennstone plc announced that their wholly owned US subsidiary, Ennstone Inc., had filed for protection from its creditors under Chapter 11 of the US Bankruptcy Code. As a consequence, the affairs of Ennstone Inc. are now being managed in accordance with the provisions of the Code.

News of the Chapter 11 filing followed hard on the heels of a separate announcement that, in order to fund immediate cash requirements, Ennstone Inc. had completed the sale of certain ready-mixed concrete assets in Virginia, without the approval of Ennstone’s shareholders – a move that was completed contrary to formal written instructions from Ennstone plc.

According to the directors of Ennstone Inc., the sale was made after taking legal advice, despite them having been reminded that significant disposals would require shareholder approval under the Listing Rules.

Ennstone Inc. are understood to be currently negotiating with their US lenders as to how the proceeds of the US$3.1 million transaction, which will be retained in the US, will be applied.

As the holding company for the Group, Ennstone plc say that while they have certain contingent liabilities in relation to the business of Ennstone Inc., neither the Group’s UK nor Polish businesses have any such liabilities or trading relationship with the US operations.

Ennstone Johnston, Ennstone Thistle and Ennstone Sp. z.o.o. will, therefore, continue to operate as normal and are expected to have sufficient cash headroom through to the end of this month, subject to ongoing support from lenders and lease finance providers.

In the meantime, following the recent cessation of talks regarding a possible offer for the Group, Ennstone are continuing to work towards an agreed restructuring with UK lenders in an a bid to secure the future of the UK and Polish trading companies.