Collapsed Auckland company owes creditors $10.2m

Aimee Shaw, NZ Herald ,
Publish Date
Monday, 18 February 2019, 1:59PM
Precision Foundry was placed into receivership in December. Photo / Getty Images
Precision Foundry was placed into receivership in December. Photo / Getty Images

Failed Auckland manufacturer Precision Foundry owes creditors a combined $10.2 million.

According to the receiver's first report, the company, which up until December last year produced specialist metal components for a range of industries, owes secured creditors $3.39m and unsecured creditors $5.5m.

It also owes $1.3m to its former 80 staff in preferential employee claims.

Precision Foundry was placed into receivership on December 18. Prior to that, the company was in discussions to sell its shares, which were unsuccessful.

Precision Foundry, formerly Masport Foundries, was taken over in October 2014 by private equity firm Challenge Partners.

The receiver's report says the Mt Wellington company had performed poorly since it was taken over due to high New Zealand and Australian dollar exchange rates, a number of "small value" customers not renewing their orders and ongoing maintenance issues within the foundry it was not able to fix, due to cashflow issues.

As of December 18, the company had a balance sheet of $7.9m.

KordaMentha receivers Grant Graham and Neale Jackson sought to sell the business as a going concern, however, acknowledged this was unlikely due to the landlord's inability to extend the lease of the foundry.

Jackson told the Herald he was not able to sell the business as a going concern. Consequently, the businesses assets have been sold by auction.

He said it was too early to say what creditors would receive.

In December, former staff of Precision Foundry cried foul over the events leading up to the company's receivership.

Some contacted the Herald to express dismay at the outcome and questioned events leading up to the company's failure, with one person alleging production had already moved to the Philippines.

Management said workers were paid three week's holiday pay before the receivers were appointed.

Challenge Partners was set up in 2012 by Paul Ayers, a former British Navy Officer, and Myles Cooper.

The fund targets "tired" industrial businesses with potential and investors buy a "seat" requiring a loan of $650,000 for 10 years.

Other businesses in the portfolio include agriculture cultivation equipment manufacturer Fieldmaster, plastics engineering firm LEP and Shuk Engineering.

Ayers told the Herald last year that tight margins meant the company was unable to reinvest in the ageing manufacturing plant.

"MFL has exhausted its financial reserves.

"We have absolutely tried our hardest but ran out of options to get through."

Precision Foundry had operated from the Panmure site since 1941.

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