One of Australia's major plastic product manufacturers, Melbourne-based Nylex Group, is likely to be broken up and sold after its bankers refused to restructure its debts.
In the past year Nylex has reported a turnaround in profitability and undertook a groupwide restructuring, but the firm was unable to negotiate more favorable financial terms with its bankers.
Originally established in 1925, Nylex manufactures low density polyethylene hoses, water tanks and piping for household, commercial and agricultural uses; polypropylene carpets and floor coverings; and automotive products, such as blow molded fuel tanks, and injection molded trim. The group also makes cold-storage boxes under the Esky name brand, which is so widely recognized that it has become a generic label for any portable icebox in Australia.
Directors called a halt Feb. 11 to trading in Nylex Ltd. shares on the Australian Securities Exchange, saying they were discussing financial arrangements with its bankers and financial advisers. The next day the board placed the firm and its 19 subsidiaries into voluntary administration, appointing Melbourne-based national insolvency firm Ferrier Hodgson Group as administrator.
But, the same day, Nylex's largest secured creditors Melbourne-based Australia & New Zealand Banking Group Ltd. and Westpac Banking Corp. of Sydney moved to take control of the group and its assets by having Sydney-based McGrathNicol Services Pty. Ltd. appointed as receiver and manager.
The banks reportedly have exposures to the Nylex Group of up to US$39 million.
In a statement to ASX, Nylex Executive Chairman John Nicholls said the board had tried to negotiate a renewal of its lending facilities and the injection of additional capital with its bankers and is disappointed that negotiations had not been concluded successfully.
A statement by McGrathNicol said the firm's objective was to work with Nylex stakeholders to stabilize the group and make an objective assessment of the various business units' financial position and prospects.
The Nylex Group businesses will continue trading and we will liaise with employees and unions, customers and suppliers urgently to ensure minimal disruption to operations, the statement said. Nylex has iconic Australian brands and we believe there is significant value in the group that we aim to realize via a restructuring and business-sale process.
Nylex last year reported a loss of US$13.8 million compared with US$7 million profit the previous year.
At the firm's November annual general meeting, then-Executive Chairman Peter George blamed its poor performance on a downturn in the water-tank market and the then-emerging global financial crisis that had caused a slump in automotive business.