Receivers are called in at Scottish Pride
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Your support makes all the difference.The milk market turned sour yesterday for Scottish Pride, the former processing arm of the Scottish Milk Marketing Board, when it appointed receivers at two of its main trading subsidiaries.
The company had been in talks to sell its business to Robert Wiseman Dairies in a deal which would have given Wiseman 80 per cent of the Scottish market. However, the company had been unable to reach commercially acceptable undertakings with the Office of Fair Trading.
Scottish Pride's shares were suspended at 42.5p yesterday morning pending clarification of the company's financial position. Receivers were later appointed to the two main trading subsidiaries, Scottish Pride and Scottish Pride Foods.
The company has debts of pounds 30m and last month reported increased half- year losses of pounds 2.45m. It has been suffering from a lack of capital, inefficient plants and an oversupplied market. The receivers said substantial losses in the fresh food sector and intense competition to supply supermarkets and discount retailers had been key causes of the problems. The final straw was the defection of two key customers, including Kwik Save, which stopped its dealings with Scottish Pride on Monday.
Blair Nimmo, on behalf of accountants KPMG, said: "The company has been in discussion with a number of interested parties for the sale of its trading activities. The request for the appointment of a receiver was made when, against a background of rapidly deteriorating trading, it became clear the company could not be confident that transactions for the sale of the activities would be achieved on satisfactory terms within a reasonable period of time."
Though Scottish Pride itself is not in receivership it has only limited assets. The company is based in Glasgow and employs 736 staff at 15 production and distribution sites throughout Scotland and the North of England. Group sales last year were pounds 96m. KPMG said there would be no immediate redundancies but could give no guarantees on future job security.
Scottish Pride is listed on the Alternative Investment Market. The vast majority of its shareholders are farmers who produce milk for the company.
KPMG will continue to trade the Scottish Pride businesses while undertaking a financial review. The main objective was to sell the business as a going concern, KPMG said.
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