Velour Producer, Wexford Weaving, Goes Into Voluntary Liquidation
July 31, 2001
A Year After Its Acquisition By DNL, Crucial American Orders Failed to Materialize
Drinagh, Wexford (Ireland) — Following the alleged collapse of its U.S. markets, velour furnishing fabric maker Wexford Weaving has gone into voluntary liquidation with the loss of 150 jobs.
Managing director Gerry Strange said the company's U.S. owners had lost "several million pounds" since taking over the company last year. "DNL Holdings will be by far the single biggest creditor," he said. "They have written off their total investment."
Wexford Weaving manufactured face-to-face velvet and velour upholstery fabrics, with integrated operations including weaving, dyeing and finishing. With an annual capacity of around three million meters and potential for the operation of 70 looms, the factory was originally set up in 1979 by the German Schoepp family to make velour fabrics for furnishings.
The company first ran into difficulties in the early 1990s. It began posting heavy losses (understood to have amounted to about $13.5 million between January 1992 and May 2001), apart from a brief period during its ownership by the RS Group, which rescued the former Schoepp Velours of Ireland plant in 1997 after the Irish subsidiary went into examinership (administration).
The company was then acquired by DNL Holdings of Greensboro, North Carolina, in spring last year for an undisclosed amount believed to be around $530,000. In total, DNL invested around $2.5 million in the business, which was renamed as Wexford Weaving, and was owed more than $1.2 million when the liquidation came into effect.
When the acquisition was announced, it was hoped the deal would provide the Irish company with additional capital and enhanced access to the then-expanding American market. However, a number of factors, including the U.S. recession, thwarted the plan, said Strange.
Speaking in the Dail (Irish Parliament), the Minister for Trade, Enterprise and Employment Mary Harney said almost $2 million of taxpayers' money had been invested in the Drinagh plant in recent years, with a view to saving it. However, the company was not able to compete with firms in low-cost economies, particularly in Asia, she admitted.
At the end of May, Wexford Weaving temporarily laid off almost 100 employees as it desperately tried to organize what the management described as a financial restructuring of the company and to await the buildup of expected U.S. orders. The three-week layoff was the third since Christmas.
During the latest shutdown, it was reported that the operation's American directors, including chairman and chief executive Jim Nehlson, had intended to fly in from North Carolina in a last-ditch effort to secure additional investment to keep the weaving firm afloat. However, the plug was pulled when their attempts failed, it is suggested.
Strange said the U.S. investors had lost confidence in the company's future and the decision was taken to go into voluntary liquidation. The business wound up with 260 unsecured creditors, who were owed in excess of $4.4 million.
However, it appears that, with a relatively small additional investment, the company could have been kept afloat. A report carried out by PricewaterhouseCoopers at the end of May indicated that Wexford Weaving needed a further $3.2 million to survive, of which $2.1 million was required immediately.
But according to Michael Wall of the Wexford branch of the Services, Industrial, Professional and Technical Union, (SIPTU), the Irish government agency Enterprise Ireland, which assists the development of existing companies, claims it was never formally approached for this additional funding with a specific submission from DNL Holdings. "I would like to think it was just ignorance of the Irish situation," he said.
"The PricewaterhouseCoopers report did appear to say the company had a viable future, although perhaps with a degree of downsizing, mainly in the administration and managerial side," Wall added. "Minor proposals were also made relating to increasing production. The major problem was the required investment."
With the weaver's markets in Europe secured through the efforts of the previous owners, DNL Holdings hoped the U.S. market would be the "icing on the cake," said Wall. "But in a year, these so-called experts did not sell one meter of fabric to the U.S., and ultimately that is what dragged it down," he alleged. "I can only presume that the spring shows in the U.S. this year did not do so well, which hastened their decision to cut their losses and close the factory."
Niall Coveny of Dublin-based Ernst & Young, who have been appointed as liquidators, said an attempt would be made to sell the business intact, with tenders probably closing at the end of August.
Coveny hoped Wexford Weavers would be sold in situ and revealed that some interest had already been expressed from both Ireland and the U.K. If these attempts fail, the company will more than likely be broken up and sold to overseas concerns, with the machinery possibly ending up in Turkey or India. If the business is sold intact, it is probable that Wexford Weaving will be a downsized operation to make it more efficient. However, Wall doubted whether the company would be disposed of as a going concern as the rent on the premises is "crippling."
Drinagh, Wexford (Ireland) — Following the alleged collapse of its U.S. markets, velour furnishing fabric maker Wexford Weaving has gone into voluntary liquidation with the loss of 150 jobs.
Managing director Gerry Strange said the company's U.S. owners had lost "several million pounds" since taking over the company last year. "DNL Holdings will be by far the single biggest creditor," he said. "They have written off their total investment."
Wexford Weaving manufactured face-to-face velvet and velour upholstery fabrics, with integrated operations including weaving, dyeing and finishing. With an annual capacity of around three million meters and potential for the operation of 70 looms, the factory was originally set up in 1979 by the German Schoepp family to make velour fabrics for furnishings.
The company first ran into difficulties in the early 1990s. It began posting heavy losses (understood to have amounted to about $13.5 million between January 1992 and May 2001), apart from a brief period during its ownership by the RS Group, which rescued the former Schoepp Velours of Ireland plant in 1997 after the Irish subsidiary went into examinership (administration).
The company was then acquired by DNL Holdings of Greensboro, North Carolina, in spring last year for an undisclosed amount believed to be around $530,000. In total, DNL invested around $2.5 million in the business, which was renamed as Wexford Weaving, and was owed more than $1.2 million when the liquidation came into effect.
When the acquisition was announced, it was hoped the deal would provide the Irish company with additional capital and enhanced access to the then-expanding American market. However, a number of factors, including the U.S. recession, thwarted the plan, said Strange.
Speaking in the Dail (Irish Parliament), the Minister for Trade, Enterprise and Employment Mary Harney said almost $2 million of taxpayers' money had been invested in the Drinagh plant in recent years, with a view to saving it. However, the company was not able to compete with firms in low-cost economies, particularly in Asia, she admitted.
At the end of May, Wexford Weaving temporarily laid off almost 100 employees as it desperately tried to organize what the management described as a financial restructuring of the company and to await the buildup of expected U.S. orders. The three-week layoff was the third since Christmas.
During the latest shutdown, it was reported that the operation's American directors, including chairman and chief executive Jim Nehlson, had intended to fly in from North Carolina in a last-ditch effort to secure additional investment to keep the weaving firm afloat. However, the plug was pulled when their attempts failed, it is suggested.
Strange said the U.S. investors had lost confidence in the company's future and the decision was taken to go into voluntary liquidation. The business wound up with 260 unsecured creditors, who were owed in excess of $4.4 million.
However, it appears that, with a relatively small additional investment, the company could have been kept afloat. A report carried out by PricewaterhouseCoopers at the end of May indicated that Wexford Weaving needed a further $3.2 million to survive, of which $2.1 million was required immediately.
But according to Michael Wall of the Wexford branch of the Services, Industrial, Professional and Technical Union, (SIPTU), the Irish government agency Enterprise Ireland, which assists the development of existing companies, claims it was never formally approached for this additional funding with a specific submission from DNL Holdings. "I would like to think it was just ignorance of the Irish situation," he said.
"The PricewaterhouseCoopers report did appear to say the company had a viable future, although perhaps with a degree of downsizing, mainly in the administration and managerial side," Wall added. "Minor proposals were also made relating to increasing production. The major problem was the required investment."
With the weaver's markets in Europe secured through the efforts of the previous owners, DNL Holdings hoped the U.S. market would be the "icing on the cake," said Wall. "But in a year, these so-called experts did not sell one meter of fabric to the U.S., and ultimately that is what dragged it down," he alleged. "I can only presume that the spring shows in the U.S. this year did not do so well, which hastened their decision to cut their losses and close the factory."
Niall Coveny of Dublin-based Ernst & Young, who have been appointed as liquidators, said an attempt would be made to sell the business intact, with tenders probably closing at the end of August.
Coveny hoped Wexford Weavers would be sold in situ and revealed that some interest had already been expressed from both Ireland and the U.K. If these attempts fail, the company will more than likely be broken up and sold to overseas concerns, with the machinery possibly ending up in Turkey or India. If the business is sold intact, it is probable that Wexford Weaving will be a downsized operation to make it more efficient. However, Wall doubted whether the company would be disposed of as a going concern as the rent on the premises is "crippling."