Ennstone disposal in bid to remain solvent

ENNSTONE plc have announced the sale of part of the trade and assets of their precast concrete products business to FP McCann Ltd. The sale marks the latest move by the company in its continuing fight for survival in the face of severe financial difficulties.

According to Ennstone’s board, the disposal of Ennstone Concrete Products Ltd was made without prior shareholder approval, in a bid to provide additional time to attempt to find a solvent solution to the Group’s funding issues.

The disposal principally comprises the plant, equipment and stock at the two main operating sites of Concrete Products, including the freehold title of the Cadeby site in Leicestershire, and a lease agreement over the Telford site in Shropshire. All staff working for Concrete Products have transferred to FP McCann.

Although the total consideration for the disposal amounts to £8.4 million, the total cash received by Ennstone on completion was £3.3 million, following a reduction of approximately £5.1 million relating to the discharge of certain hire purchase and finance lease obligations.

Receipt of the disposal proceeds will provide sufficient liquidity for the Group to continue to trade until the end of January 2009. Without the disposal proceeds, Ennstone say they would have run out of cash headroom in the UK prior to the end of December 2008.

In addition to ongoing efforts to fully refinance the Group, including possible restructuring of existing debt facilities, equity fundraising, recapitalization/reorganization of the Group or a third-party sale, Ennstone say further smaller individual asset disposals in both the UK and US businesses are also being considered to provide additional short-term cash funding for working capital in both the UK and US.

However, the company admits that if no alternative solution is forthcoming by the end of January 2009 or the exhaustion of the disposal proceeds, the Group is likely to be unable to trade and the board will be forced to seek the appointment of receivers, administrators or liquidators without a realistic possibility of a solvent solution to the Group’s funding requirements.

In the meantime, Ennstone have announced that chartered accountant Julian Cooper has joined the board with immediate effect as executive chairman. Mr Cooper, a senior partner of MPC Partners LLP and a former partner at Arthur Andersen, brings with him considerable management experience having held a number of executive management positions.

He succeeds interim executive chairman Graham Brown, who will remain on Ennstone’s board as a non-executive director.