FIRST National Bank (FNB) has dropped its liquidation application for EH Walton, allowing one of SA’s oldest packaging companies to resume business rescue, it was announced yesterday.
This is a potential shot in the arm for about 450 workers at the company, most of whom have not been at work since FNB froze the printer and packager’s overdraft facility at the end of last month.
The business rescue process came to a halt earlier this week, when FNB made a technical objection over the meaning of wording as presented in the old and new companies acts. This led to the parties attending an urgent hearing at the Port Elizabeth High Court yesterday morning.
A settlement agreement was thrashed out on Wednesday night, EH Walton’s attorney, Michael White of Port Elizabeth-based Lexicon Attorneys, said.
He said FNB had withdrawn the liquidation application and recognised the “validity” of the business rescue proceedings. “The matter was made an order of court (on Thursday) morning,” Mr White said. “The reality is liquidation is now off and it’s back to business.”
EH Walton, which turned over R144m in the 2011 financial year, had more than 100 customers on its books, of which about 30 were active accounts. The company earlier said profits had been under pressure, leading to a drying up of cash flow.
EH Walton’s marketing director, Ludwe Sityoshwana, said yesterday the company was looking to restart trading. He said EH Walton would “try and make a go of it”, and would save as many jobs as it could.
Mr Sityoshwana said the company was now revitalising its relationships with customers.
“I expect to lose some market share but some of our customers have been very understanding and supportive in this uncertain time.”
He said he could not comment on whether FNB had unfrozen the company’s overdraft facility.
By filing a liquidation application earlier this month, FNB forced EH Walton to close down. The company then applied for and received business rescue on April 11, and this had now been confirmed.
Mr White said: “I think it is inevitable there will be a restructuring across the company’s full activities.” He said no final decisions had been made about EH Walton. However, a skeleton staff was already at work planning the future, he said.
In addition, business rescue implementers from accounting firm Grant Thornton in Port Elizabeth were already revising the company’s business strategy, to ensure it was viable in the future.
Mr Sityoshwana said workers were represented by the Chemical, Energy, Paper, Printing, Wood and Allied Workers Union, and the South African Typographical Union.
Article source: http://www.businessday.co.za/articles/Content.aspx?id=170129