Failed Yarrows bakery business attracts ‘considerable interest’, receiver says
By Paul McBeth
Aug. 8 (BusinessDesk) – Yarrows (The Bakers) Ltd., which called in the receivers in May, has attracted “considerable interest” and the receiver is negotiating with prospective buyers, according to its first report.
Receiver Andrew Bethell of BDO Spicers has let the Taranaki-based baker continue to trade as a going concern as he seeks to “maximise the value of the business,” he said in his report. Bethell didn’t put an estimate on the likely recovery, saying it would prejudice the sale process.
“There has been considerable interest in the sale of the businesses and we continue to liaise with the interested parties in this regard,” Bethell said.
Yarrows called in the receivers on May 30 after it failed to find a buyer for some or all of its Australian operations in a bid to cut indebtedness and restructure its local business. The bakery laid off 41 people, retaining 192 workers to keep the business going.
Yarrows had total liabilities of $72.8 million on total assets of $76.7 million as at May 30. The bulk of the baker’s debt was to Westpac Banking Corp., which is owed $55.2 million plus interest. Redundancies are expected to result in employee claims of some $2.4 million across 237 staff.
Bethell said employee claims were “high largely due to the long length of service and the substantial contractual redundancy of the workforce.”
Yarrows’ assets were mainly inter-company investments worth $53.5 million, with fixed assets of some $15.6 million, as at May 30.
The report also included updates on related companies Yarrows Traditional Foods 1923 Ltd., which holds 90% of the shares in Yarrows (The Bakers), and Southern Cross Investments Ltd., which owns land, buildings and group intellectual property.
Yarrows Traditional Foods held inter-company assets worth $40.6 million and owed $25.5 million in related party loans as at June 2010. Southern Cross Investments held $54.5 million of inter-company assets on related party debt of $52 million.
Bethell said the Inland Revenue Department’s $115,000 preferential claim is likely to increase.
Unsecured creditors are owed $8.1 million across the group, and Bethell said it was too early to say whether there would be any funds left over for them.
Last month, Bethell identified John Yarrow, who sold his stake in Yarrows to brother Paul, as an interested buyer, according to the Taranaki Daily News.
John Yarrow sold his stake in 2005, and was later taken to court by his brother, who claimed he had paid too much in the buyout. The case was settled out of court and the details suppressed, the TDN reported.
The brothers were the third generation of family owners for the bakery, which was founded in 1923 by Alfred and Grace Yarrow.