Creditors of bathroom fittings company Astracast are unlikely to cover their full liabilities as owners HLD Group has put the company into administration over a £90m black hole in its pension fund.
The looming pension liability deterred any interest from trade buyers or private equity firms so insolvency experts recommended that a pre-pack sale would provide the best option for creditors of the business and employees.
Secured creditor Aldermore is expected to recover its £6.9m lending, but Astracast’s pension scheme, which has an estimated buyout liability of £90m and trade creditors totaling £13.4m are unlikely to receive a realisation which recovers their full liabilities.
Astracast was part of a cluster of companies owned by HLD known as Spring Ram, trading primarily in the bathroom fittings sector. Formerly known as Jacuzzi UK Group plc, prior to its acquisition by the HLD Group in December 2012, Astracast had been burdened by a huge pension deficit.
In a creditors’ report for Spring Ram – renamed CRS Old – administrators at Leonard Curtis in Manchester, said: “The principal liability for the scheme remained with Astracast, with the company providing a guarantee. The scheme had a significant deficit, estimated by Astracast’s directors at circa £90m. The company was not in a position to honour this guarantee.”
The Astracast pension is now being transferred to the Pension Protection Fund which will maintain payments to existing pensioners and pay future pensioners around 90% of what they would expect to receive.
Astracast was put through a pre-packaged administration with HLD acquiring the assets through Ashworth Global Pipe Systems, which has now changed its name to Astracast and the company is continuing to trade.
According to the Leonard Curtis document, CRS Old also owes related companies £103m and has total liabilities of £193m.