Noble loss: A century-old SA company about to learn fate
A Noble & Son Ltd went into voluntary administration on June 15 when its directors decided the company was unable to repay its debts and restructuring was urgently needed.
James McPherson and Austin Taylor of Adelaide-based Meertens Chartered Accountants have been appointed as directors and say the company is insolvent.
A second meeting of creditors will be held tomorrow (Wednesday July 20) where a rescue plan proposed by E&A Limited will be presented.
Nobles, based in Kilburn, provides lifting and rigging equipment, technical services and engineering design for a range of heavy industries including mining, oil and gas, construction, shipping, manufacturing and defense.
The latest creditors’ report released last week shows the company reported net after-tax losses for the five years ending June 30, 2021 of $18.3 million.
During the same period, financial accounts show Nobles sold assets totaling $14.7 million to help cover losses.
Over the five years, the company’s stock ownership decreased by $1.7 million and the amount owed to trade creditors increased by $1.2 million.
At the end of the period, the company still had $9.79 million in net assets or equity.
Despite this, shareholders are asked to sell their shares to ensure the survival of the company under a new owner.
However, the creditors’ report provides limited current financial information and does not include any financial accounts for the 2021-22 fiscal year, which ended nearly three weeks ago.
Nobles’ board informed the directors that it had been working to restructure the company for a number of years prior to the appointment, which resulted in a $2 million reduction in operating costs at during fiscal year 21.
According to the directors following meetings with the company’s executives, its failure was due to:
- The COVID-19 pandemic adversely affected the company’s restructuring, which did not meet its objectives;
- The pandemic has reduced demand for the Company’s products and services;
- The pandemic has disrupted and caused delays in the company’s supply chains;
- The company failed to meet its short-term goal of a return
- Insufficient cash;
- Continued business losses and uncertain business environment;
- Current annual fixed expenses with respect to personnel and property costs; and
- Loss of key personnel
Nobles owes at least 628 unsecured creditors a total of $5,249,827.38
Under DOCA, these creditors will be paid between five and 33 cents on the dollar. In a liquidation scenario, they will receive nothing.
Secured creditors, including Meertens Chartered Accountants, Westpac and Scottish Pacific Financier, and all pending employee entitlements will be paid in full.
The company owns three properties whose land and buildings have a net book value of $2,698,382. However, two of the properties, one in Roxby Downs and one in Karratha WA, are mortgaged. Under the proposed DOCA, EAL will acquire all three properties.
He has motor vehicles worth $260,000. The company’s accounts disclose a net book value for various plant and equipment items at $1,870,135.
“At first glance, it may appear that some valuable assets may be available, particularly upon liquidation of the company,” McPherson and Taylor wrote in the latest creditors’ report.
“However, in our experience, items such as office equipment, leasehold improvements, computer hardware and software will fetch a low to negligible return when sold at auction.”
Nobles owes the Australian Taxation Ofiice $1,547,910 for PAYG tax ($1,204,801.81), unpaid pension contributions ($254,329) and employee benefits tax ($52,843).
He also owes Revenue SA $31,034 in state taxes.
The company employed 155 full-time staff at 11 locations across Australia and owes them around $2.48 million in unpaid entitlements such as annual leave and seniority leave.
The Keswick-based E&A companies employ over 1400 people and have historically retained trading names through subsidiaries.
If the takeover goes through, around 100 Nobles employees will be retained and the brand established in Adelaide in 1911 will survive.
In a letter to shareholders dated June 28, Nobles chairman Ian Stirling said the company’s deed of arrangement (DOCA) suggested by E&A was based on getting a better return for creditors. than the liquidation of the company.
He urged Nobles shareholders to surrender their shares without return.
“It is a key term of the proposal that EAL acquire all the shares and therefore the business of Nobles,” Stirling wrote in the letter seen by InDaily.
The directors of Nobles have asked shareholders to accept the transfer of their shares by today (July 19), ahead of tomorrow’s meeting of creditors.
“The DOCA can only be completed if your shares are transferred as required by E&A Limited’s proposal,” McPherson wrote in a letter to shareholders this month.
“Furthermore, if the shares are not transferred as required by the terms of E&A Limited’s proposal, then the company would enter into liquidation on resolution passed by creditors or by order of the court.”
It does not appear from the creditors’ report whether any process of competition or recapitalization was explored by the administrators.
Nobles’ revenue reached nearly $48 million in FY2018, but has since steadily declined and totaled $43.8 million in FY21.
The company slipped in the rankings in InDaily’s South Australian Business Index in recent years, rising from 70 in 2019 to 79 in 2020 and 93 in 2021.
Under the Corporations Act, directors can apply for court orders allowing them to transfer shares.
“In the event that some shareholders do not agree with the transfer of their shares into the company, please be aware that we are seeking court orders allowing us to sign the transfer of shares in place of any shareholder who does not execute not his action. transfer, if E&A Limited’s proposal is accepted and the company enters into DOCA,” McPherson wrote this month.
Ultimately, if there are dissenting shareholders, they are entitled to ask questions and oppose any transfer request presented by the directors.
However, cost then potentially becomes a factor as they would likely need to hire attorneys and an opposing expert to litigate the directors’ claim.
Under the Corporations Act, tomorrow’s meeting has three possible outcomes: the nobles could be declared solvent, which has already been ruled out by the trustees; creditors could agree to adopt the proposed DOCA; or, the company could be put into liquidation.
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