The UK arm of the international paper merchant PaperlinX has been placed into administration and has ceased trading at 14 of the company’s 19 UK sites, making 198 workers redundant.
The news comes at a time when the industry seemed to be getting back onto its feet after the economic recession and could have further repercussions as the company was one of the largest paper merchants in the country.
The Australian parent group of PaperlinX UK has said that its fall into administration was ‘unavoidable, given the circumstances’. A statement issued overnight cited ‘the continued lower demand for paper and decline in margins in the United Kingdom, together with the difficulty in restructuring substantial legacy pension liabilities, and the withdrawal of credit insurance’ as the reasons for the UK Group being placed in administration. It said that opportunities to divest part or all of its European operations had been explored but could not be brought to a satisfactory conclusion.
The statement went on: ‘Even with ongoing and substantial cash investment, the PaperlinX board is of the view that a turnaround in the UK Group’s performance and profitability is unlikely. As such, the PaperlinX Board determined that it was not in the best interests of PaperlinX to continue to support the UK’s trading losses and adverse liquidity position or to fund significant restructuring initiatives.
PaperlinX chief executive Andy Preece said: ‘This has been a difficult decision for the local directors of the UK Group, but one that I believe is unavoidable given the circumstances. PaperlinX has strongly supported its UK operations for many years, but despite continued efforts and the investment of significant capital over recent years, it has not been possible to successfully restructure the UK Group.’
Adminsitrators Deloitte LLP have been appointed to take over management of PaperlinX UK, which includes the paper merchants The Paper Company Ltd, Howard Smith Paper Group Ltd, Robert Horne Group Ltd. In administration, the business is in the hands of Deloitte’s Matt Smith and Neville Kahn.
Employees were called to meetings and informed of the news on 1April 2015, with up to 693 staff losing their jobs, and 14 sites no longer trading. The business will continue to trade from five sites, these being: Belfast; Coventry (Purple Packaging); Manchester; Northampton – Mansion Close (Head office); and Northampton – Rhosili Road.
The full list of companies – some non-trading holding and subsidiary companies – that have entered administration is at the end of this article, but it specifically relates to PaperlinX UK’s paper and visual technology solutions businesses. The UK packaging businesses – Parkside Packaging, 1st Class Packaging and Donington Packaging Supplies – are not included in the administration and are trading normally.
None of the other global operations of PaperlinX, including PaperlinX Ireland Ltd – which trades in the Republic of Ireland and Northern Ireland – and the businesses in mainland Europe, Asia and Australasia, are impacted by the UK administrations and continue to trade normally.
Joint Administrator Matt Smith commented: ‘The administration appointment specifically relates to Paperlinx UK’s paper and visual technology solutions businesses. The industry has faced an increasingly challenging environment due to falling demand as digital communications have increased. We are investigating how best to maximise value in the businesses for the benefit of its creditors.
‘The Joint Administrators are seeking to continue to trade the businesses on a limited basis to secure the best value available from current stock holdings and other assets. Many of the sales office locations are being closed today. The businesses will continue to actively trade from five sites, including the Northampton head office, but on a more limited basis than previously. During this period we will also be attempting to find a purchaser for all or parts of the businesses.
‘Employment specialists from the Joint Administrators team will be making sure affected employees are supported in making their claims to the Redundancy Payments Service for redundancy, pay in lieu of notice and any other appropriate claims. A dedicated email address and helpline for employees has also been established.’
Full list of entities entering administration
PaperlinX (Europe) Limited
PaperlinX Investments (Europe) Limited
PaperlinX Brands (Europe) Limited
PaperlinX (UK) Limited
PaperlinX Services (Europe) Limited
PaperlinX Treasury (Europe) Limited
Robert Horne UK Limited
Robert Horne Group Limited
Howard Smith Paper Group Limited
The Paper Company
Howard Smith Paper Limited
W.Lunnon & Company Limited
Trade Paper Limited
Sheet and Roll Convertors Limited
Precision Publishing Papers Limited
Pinnacle Film & Board Sales Limited
The M6 Paper Group Limited
Contract Paper Limited
