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Production pruning - Mercer Group to close Brisbane factory
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Wednesday, 31 Aug 2011
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It is reported that struggling stainless steel manufacturer Mercer Group is shutting its Brisbane factory and appointing new executive management after posting a loss of USD 9.4 million. The company is in breach of its interest cover covenants and is in discussions with its bank over that.

Allan and Jean Hubbard, and their associated interests, hold 45.13% of Mercer, but the Hubbards' assets are in statutory management. Christchurch financier Humphry Rolleston also has substantial interests.

A new fund, the Rakaia fund, run by a Rolleston related company, has invested USD 3.3 million in Mercer.

The USD 9.4 million loss for the year to June 30th 2011 compares with a USD 3.3 million loss for the previous year and a USD 2.6m loss the year before that.

Mercer's directors said that they were satisfied it was appropriate to prepare the company's financial statements on a going concern basis.

Mr Garry Diack new chairman of the company said that the directors had decided after the unacceptable losses to appoint a new CEO Mr Rodger Shepherd to run the company. He would be supported by a new part time CFO Mr Tobin Blathwayt.
Performance in the Australian business had been poor and it was being cut back, with the Brisbane workshop to be closed by the end of September. After the restructure Mercer is forecasting to be EBITDA positive in the first quarter of the June 2012 year.

Mr Diack said that the restructure would provide a solid base for the company to focus on profitable growth and commercialization of its considerable intellectual property. The company was also close to finalizing a funding package to complete the restructure and enable new management to make the changes.

Mercer would announce final details next week. The New Zealand business recorded positive earnings before interest, tax, depreciation and amortisation but the losses in Australia were significant. Revenue fell 17% to USD 30.4 million for the year to June 30th 2011. In the last 12 months a rights issues had raised a net USD 8.5 million to repay debt.

(Sourced from www.stuff.co.nz)

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