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Changes at LW Rudkin to stem ongoing losses

News Release
15 May 2009

Changes announced at Lane Walker Rudkin to stem ongoing losses

The receivers of Lane Walker Rudkin Industries Limited (LWR), Brian Mayo-Smith and Stephen Tubbs, have today announced a series of changes required to stem operating losses.

The changes involve a combination of measures including:

- closure of unprofitable business units where there is no realistic prospect of a sustainable position being achieved
- preparation of some business units for sale where profitability is in prospect but they do not fit the ongoing business model, and
- merger of some activities to retain revenue and use resources efficiently

The changes involve 186 of the group’s 470 staff being made redundant –102 in Christchurch, 61 in Greytown, 19 in Pahiatua and four in Auckland. There are no redundancies at the Timaru plant.

Mr Mayo-Smith and Mr Tubbs were appointed joint receivers and managers on Tuesday 28 April to protect the financial position of LWR and its subsidiary Pod while issues facing the group are resolved. The LWR operations are currently unprofitable and have incurred a substantial increase in bank debt.

Mr Tubbs said today that the initial investigation of LWR’s affairs had shown that the group had not been profitable for a number of years, and that the position had been worsened by the recent economic slump. “There is no realistic alternative to a programme of substantial change such as we have outlined today,” he said. “Even for the continuing businesses, the position remains difficult and no assurances can be given as to future profitability.

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“We regret the impact on the individuals and families affected by the need to reduce the company’s work force, but it is clear that without the changes announced today the impact would be much greater down the track.

“We are also acutely aware that employees have the most to lose if the problems facing the company are not addressed – through the loss of more jobs in the first instance, and also through loss of the company’s ability to meet employees’ preferential claim for unpaid wages, holiday pay and redundancy entitlements.”

Mr Tubbs said the receivers were working closely with representatives from Work and Income New Zealand, the Ministry of Social Development, the National Distribution Union and budget advisory services to identify and co-ordinate assistance for the employees made redundant. Assistance would be made available at the workplace where possible, he said.

Mr Tubbs said the receivers have received expressions of interest in several business units potentially available for sale.

The POD group of businesses owned by LWR – Designer Textiles International, Michele Ann and Mollers Homewares – are not in receivership and are not affected by the changes. These continue in operation under a new board and management structure reporting to the receivers.

ENDS

© Scoop Media

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