Metalrax agrees refinancing deal with banks to secure future

Jul 3 2009 by Jon Griffin, Birmingham Mail

THE jobs of hundreds of West Midland workers looked safer today after Birmingham-based Metalrax PLC agreed in principle a crucial refinancing deal with the banks.

Last month Metalrax published annual results revealing a £16.2 million loss for 2008, warning that its future as a “going concern” was in potential jeopardy.

The group, one of the region’s best known industrial names, said in its annual results announcement that the future of the group depended on re-financing discussions with its bankers.

But chief executive Andrew Richardson said today: “Whilst our immediate future was not in question at that point, it is of course vital to the long-term well-being of the group for such an agreement to be in place.

“I am pleased to report that the bank has now come back with proposals that are broadly acceptable to us.

“These are now subject to the agreement of the pension trustees and The Pension Regulator.

“The refinancing of the business is a crucial step in securing the long-term future of the business and re-establishing us as a major force in the UK engineering sector.”

In another major step forward in the restructuring of the group, Metalrax’s loss-making Romanian subsidiary, Hidrosib, has applied to the Romanian courts to commence insolvency proceedings.

The eastern European hydraulic equipment manufacturer, acquired by the group in 2006, is currently losing around £100,000 a month and, despite Metalrax exploring all avenues to save the business, it has finally had to admit defeat.

Mr Richardson said: “We have pumped around £1.5 million into this enterprise in the last 18 months and really wanted to make it work. Whilst Metalrax finalises its refinancing package for the group, we must conserve cash wherever possible and, given the current economic climate, we have been unable do this within the constraints of the agreement set out with the Romanians.

“The decision to place Hidrosib into the insolvency process has not been taken lightly, but it has been haemorrhaging cash.”