Nov 22, 2017 - Scott Technology outbid an overseas buyer when it bought Dunedin-based engineering firm DC Ross out of receivership, a six-monthly report from the receivers shows. DC Ross, which supplies precision metal formed parts, was tipped into receivership in September 2016 and in June this year Scott Technology said it had entered an unconditional agreement to purchase all the assets of the company for a total purchase price expected to be less than $500,000.
In its annual report, Scott Technology, also based in Dunedin, said it paid $375,000 for DC Ross, and its tool room and tool design capability has already enabled it to undertake significant work for an appliance manufacturer in Australia.
It also noted the inventories, plant and equipment of the DC Ross business were purchased from DC Ross’ receivers for an agreed total value which was less than market value, resulting in a fair-value gain on acquisition.
In today's report, DC Ross's receiver Malcolm Hollis of PwC said they had corresponded with multiple interested parties and attracted an overseas buyer. He did not identify the company and was not immediately available for comment. However, prior to settlement, it received a "large offer from a third party," he said in the report. "We consulted with our appointer, who agreed this was the best possible offer received to date and retained employment for all staff," said Hollis.
Hollis also said the receivers are in negotiations with third secured creditor Fletcher Steel regarding the quantum of its purchase money security interest claim - which gives it the right to receive debtor proceeds up to the value of steel contained in the part sold. According to the report, Fletcher Steel is owed $609,670.
"Once we have undertaken a review of the calculations we intend to make a final distribution to Fletcher Steel," said Hollis.
The first secured creditor is Bank of New Zealand, which is owed $4.3 million while the second secured creditor is Aorangi Laboratories, owed $13.8 million. According to Hollis' report "based on the realisations to date there will be a significant shortfall to the secured creditor and therefore no funds available for a distribution to unsecured creditors."
Scott Technology shares last traded up 1.4 percent at $3.70 and have gained 70 percent this year.
| A Sharechat release || November 22, 2017 |||