EH WALTON, one of SA’s oldest packaging companies, has been rescued from liquidation by the country’s second-largest printing and packaging business, the privately held Golden Era.
The new owner, which paid an undisclosed cash sum for 100% of the Port Elizabeth-based EH Walton, pledged to maintain most jobs, while making large investments and expanding the business.
In April, First National Bank (FNB) dropped its liquidation application for EH Walton, allowing it to resume a business rescue after the Port Elizabeth High Court overruled a technical objection made by the bank over the meaning of wording as presented in the old and new companies acts.
Now creditors and about half of the 450 workers at the company, most of whom had not worked since FNB froze the printer and packager’s overdraft facility at the end of March, stood to benefit, according to EH Walton’s attorney, Michael White of Lexicon Attorneys.
“Creditors are delighted with the deal,” Mr White said yesterday, declining to identify the parties.
He said in terms of the new Companies Act, Golden Era had adapted the rescue to its buyout plans.
“It’s a true business-rescue success story,” Mr White said.
EH Walton turned over R144m in the previous financial year and had more than 100 customers on its books, of which about 30 were active accounts. But the company said earlier this year its profit had been under pressure, leading to a drying up of cash flow.
At the time, EH Walton marketing director Ludwe Sityoshwana said, after FNB had recognised the validity of the business-rescue proceedings, that 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.
“About two months ago the company was about to be liquidated. This was not contested and it was virtually closed for business when the overdraft facility was frozen,” Mr White told the Port Elizabeth Weekend Post newspaper this weekend. “Hundreds of jobs were going to be lost and the city was going to lose one of its economic institutions.”
He said following the implementation of the business-rescue plan and sale of the company to Golden Era, its future was now secure, including the futures of a large proportion of its staff.
David Honeyball, a business resource practitioner and partner at Grant Thornton chartered accountants, which was appointed to implement the business rescue plan, also hailed the turn of events.
“The outlook for this company was very uncertain, but we have now shown that business-rescue plans can be very effective,” he told the Weekend Post.
Mr Honeyball said about 215 jobs would be retained through the deal with Golden Era, which had bought EH Walton’s brand and premises.
Golden Era had customers throughout southern Africa, and had regional branches in Durban, Cape Town and Zimbabwe.
EH Walton, which was established in 1845, had invested R22m in modern equipment over the past three years to boost competitiveness. It makes packaging for the confectionary, automotive, liquor and pharmaceutical sectors.
The workers were represented by the Chemical, Energy, Paper, Printing, Wood and Allied Workers Union, and also the South African Typographical Union.
Article source: http://www.businessday.co.za/articles/Content.aspx?id=174388