Flour mill and stock feed busines Aust Asia Milling is on the market after entering administration last month with $9 million in debt.
The 124-year-old business, which is based in the country town of Young in New South Wales, also trades as Young Stock Feeds.
John Vouris and Bradley Tonks of Lawler Partners were appointed as administrators on July 27 and the business was advertised for sale “as a going concern” today.
Vouris told SmartCompany Aust Asia Milling had a turnover of $16.6 million last year but had been experiencing financial difficulties and so was nearing insolvency.
“There’s a whole raft of causes including droughts, floods which affect the wheat prices and the availability of wheat,” Vouris says.
“But also the company has been hit by a few court cases which are either pending or unsuccessful.
“The main one is in relation to a contaminated feed lot, which is in the process of getting to court now and involves millions of dollars.”
Vouris says the bank is owed nearly $4 million, which includes $3 million on the property and $1 million to debtors. Debtors are factored through the National Australia Bank.
Aust Asia Milling’s debts also include around $5 million in unsecured creditors, which includes the growers and trade creditors.
“There were 35 full-time staff but we have reduced staff levels because one of our customers has pulled the pin claiming ‘uncertainty of the administration process’. But we are buoyed by the rest of customers supporting the company,” says Vouris.
Aust Asia Milling is now down to 30 staff and Lawler Partners is proceeding to trade on with a view to a deed of company arrangement or sale of the business as a going concern.
A creditors’ meeting will be held tomorrow in Young and Vouris says the administrator has already received expressions of interest.
“These include local companies and maybe be a competitor; also the director is working feverishly, as the make-up of this company consists of growers and he is trying to get together with the major growers to turn that debt into equity,” Vouris says.
“It would make the balance sheet a lot better, so the deficiency of the company is obviously reduced dramatically.”
Vouris says he is “confident” that a deed of company arrangement will be possible or a refinancing.
“The last card in the deck, and we hope we don’t have to use it, is the liquidation.”
John Campbell, a director of Aust Asia Milling, said the board “exhausted all avenues” before appointing administrators.
“The board has the support of employees, customers and suppliers and is confident that the business has a future.
“As such, it is the board’s intention to propose a deed of company arrangement”.