Silentnight - last ditch bid to avoid administration
Silentnight, the UK’s biggest bed manufacturer based in Barnoldswick has announced it has applied for a Company Voluntary Arrangement, an agreement between a company in financial trouble and its creditors which sets out a schedule for money owed to be repaid over a set period of time.
The firm, which has 650 staff in Pendle, and a further 600 across northern England and Ireland, said the CVA was the last option to find a cash injection to reduce its liabilities and address a widening pensions deficit large enough to negate the fact it is still making a profit.
It was revealed Yorkshire Bank, which had provided the firm with a £3.7m., an overdraft facility of £5m. and a confidential invoice discounting facility worth £10m, withdrew its funding in January. While a third party financier has bought the loan from Yorkshire Bank, Silentnight has been unable to find a commercial bank to provide banking facilities.
A formal proposal to the Pension Regulator, empowered by the Government to regulate work-based pensions, offering an equity stake in the Silentnight Group has also been declined.
The firm’s directors will meet creditors on May 6th to seek their approval for the CVA. If they agree to the terms, which will see them take a short-term hit and receive 65% of what they are owed, bosses say the future of the company will be secured.
However, if they cannot get the creditors on board it is understood the only option left may be to try to sell the business as a going concern.
Silentnight Chief Executive Neal Mernock said: “Silentnight is one of the UK’s best-known brands, with a proud history of manufacturing and distributing beds since 1946. The Group is trading profitably and generating cash.
“Unfortunately, the withdrawal of our facilities by our formerly supportive lender earlier this year has left us with an unserviceable level of historic debt.
“That, combined with an onerous and growing pension deficit accrued as a result of a series of acquisitions made during the ‘80s and ‘90s – all of which have since been closed or sold as we have refocused on our core bed manufacturing and distribution operations – has forced us to seek an immediate injection of cash.
“In the absence of a willing commercial banking partner, and after a formal proposal to the Pension Regulator offering an equity stake in the Group was declined, a CVA has been deemed the only viable route forward at this time.
“The approval of the CVA proposal by our creditors will be a major step forward in securing Silentnight’s future. With the ongoing support of our loyal suppliers and staff, and on a more stable financial footing, we are confident Silentnight will continue to generate substantial profits, to outperform the wider market, and to innovate and grow market share as home to both the UK’s and the world’s biggest bed brands.”
There’s more on this story in today’ Nelson Leader series of newspapers