Receiver PFK has had expressions of interest after announcing the sale of the assets of East End Sawmills of Glasgow. But it said it was too soon to predict whether the company’s premises would be sold as a single lot and continue as a timber operation.
East End and its Cumbernauld production arm Stewart Timber went into receivership at the start of the month, citing the combination of the recession and a range of other factors for its financial problems.
The 59-year-old company’s original Dalmarnock site was compulsorily purchased to make way for developments for the 2014 Commonwealth Games. It then invested £1.5m in its new mill and trading premises.
“After fighting the compulsory purchase for several years, it finally got the deal it wanted. But it completed its relocation in 2008 just as the recession hit and was unable to back up its investment with turnover,” said PFK corporate recovery partner Bryan Jackson. “It also had £350,000 of bad debt, largely thanks to the collapse in the construction industry, and experienced delay in starting up a new sawline installed last year due to the bad winter preventing log delivery. This resulted in a massive reduction in cash flow.
“Like other businesses that have gone into receivership in the current economic climate, it was the succession of different problems that led to insolvency ”
Most of East End’s 50-strong workforce was made redundant immediately as it had “virtually no stock or work in progress”, but a skeleton staff was kept on to maintain the premises.
Mr Jackson said the preferred outcome would be for a new owner to “take everything”.
“The premises are impressive, so we believe this is a possibility and we had a serious enquiry for the whole operation fairly early.”
He added, however, that it was too early to say whether selling the assets as a unit or putting East End’s premises and machinery up for auction as separate lots was more likely.
PFK has not set a closing date for a sale, but said it would make an announcement soon.
