Kilmarnock, Scotland, January 6-—Stoddard International went into receivership on Thursday after failing to secure a last-ditch financial lifeline from its bankers according to business.scotsman.com.
Ernst & Young, which is handling the receivership, will now assess the company’s financial position with a view to selling it as a going concern. Kilmarnock-based Stoddard, which is Scotland’s oldest carpet maker, warned just before Christmas that it needed extra cash to survive.
It said today: "The board has resolved that it has no alternative but to invite its bankers to appoint a receiver and has requested the suspension of the company’s shares."
Tom Burton at Ernst & Young said: "The company is in a critical financial position and solutions to its problems will not be easy to find. The business has already undergone significant restructuring in 2002 to address the issue of declining sales, but substantial debts still remain.
"It is much too early to say whether a buyer can be found for the business. Our first task is to determine whether it is possible to continue trading for sufficient time to identify and conclude a sale to a suitable buyer."
Shares in the company have fallen from 8p in 2002 to 0.87p before they were suspended today.
The company, which employs 500 workers, is Scotland's oldest carpetmaker, tracing its roots back to 1837, when the trade in Paisley shawls was booming.
Stoddard made the red carpet on which the Queen, then Princess Elizabeth, walked down the aisle of Westminster Abbey on her wedding day in 1947. It also, ironically, provided carpet for the blockbuster film Titanic.
In a late statement to the stock exchange only one hour before the market was due to close on the last full trading day before the Christmas break, Stoddard said "Stoddard International announces that discussions with its bankers are continuing.
"Additional funding is required by the company in the short term and this has not yet been secured. The board is working towards a full refinancing of the company.
"At the present time the board cannot be certain that such a refinancing will be possible."
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.
The carpet manufacturer, led by chairman Alan Scott, has also been attempting to secure a further [pounds]7m from additional asset sell-offs, but poor trading continues to drain the firm's rapidly diminishing resources.
In the year to June 30, net assets fell from [pounds]8.2m to just [pounds]5.2m.
Since Stoddard's auspicious early days, it has been in decline as demand has fallen for Axminster.
In the first half of 2004, the company 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 included 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 6.5per cent down on the same period in 2003.
