Scottish Carpet Maker Stoddard Seeking Funds to St
Kilmarnock, Scotland, September 29—Troubled carpetmaker Stoddard International lost 30% of its remaining value yesterday after revealing that it is seeking fresh borrowing to stay afloat, according to the Europe Intelligence Wire.
The company also hinted it may seek to cut contributions to the firm's deficit-laden pension scheme as it battles for survival.
Unveiling another grim set of trading figures, chairman Alan Scott said last night "We are currently negotiating alternative banking arrangements to provide the funding necessary to stabilize the business. The existing facilities (in place until June 2005) are likely to prove inadequate."
He added "Extra funding must be secured to make progress, and every effort is being made to conclude this."
Stoddard has closed two plants over the past year or so, including its weaving factory and headquarters at Elderslie after 142 years of operation, and consolidated the business into one site in Kilmarnock. Property disposals have been used to cut net debt, which fell (pounds) 5m to (pounds) 12.4m at the end of June.
A further (pounds) 7m reduction is anticipated in the coming months as the remaining selloffs are finalized, but poor trading continues to drain the firm's rapidly diminishing resources. Net assets fell from (pounds) 8.2m to just (pounds) 5.2m in the year to June 30.
Stoddard, which employs 500 workers, is Scotland's oldest carpetmaker, tracing its roots back to 1837, when the trade in Paisley shawls was booming. Stoddard also made the red carpet on which the Queen, then Princess Elizabeth, walked down the aisle of Westminster Abbey on her wedding day in 1947.
However, the firm has been in decline as demand has fallen for Axminster. In its first half of 2004, Stoddard posted an operating loss before interest and exceptionals of (pounds) 2.7m, compared with a (pounds) 1.6m deficit in the same period last year. This year's figure includes the impact of a (pounds) 600,000 contribution to the company's now closed final salary pension scheme, which was carrying a funding shortfall of (pounds) 13.6m at the end of last year.
At (pounds) 13.4m, first-half turnover was 6.5% down on the same period in 2003.
Scott said "Market conditions remained tough, and tight cash constraints restricted our ability to regain momentum following over two years of major business restructuring. Overheads fell by (pounds) 1.3m, but our inability to support more volume meant we have yet to realise fully the benefits of operating on one site in
Kilmarnock."
Stoddard shut its pension scheme to existing staff earlier this year but pledged to continue making contributions. Given the company's cash constraints, discussions will be held with the pension trustees at the earliest possible time, the company said yesterday.
Stoddard's predicament carries echoes of the Motherwell Bridge engineering saga, where a "revolving door" receivership saved jobs through the creation of a new company which was not obliged to take on the pension liability. There is no suggestion Stoddard plans to pursue this option.
