Australian power tool empire Global Machinery Company – better known to those handy around the home as GMC – has been placed in receivership by its main lending banker Westpac Banking Corporation.
GMC was owned by Melbourne-based entrepreneurs Peter Hosking and Tony D’Antonio. The pair were valued on this year’s BRW Rich 200 at $270 million and were praised for the way they built their fledging tool company into a worthy rival for global companies such as Black & Decker and Ryobi.
The company’s fall from grace has been spectacular. In 2005, the GMC’s revenue was reportedly $300 million and Hosking and D’Antonio had built a substantial export business with overseas sales of more then $90 million.
The key to the business was providing affordable power tools (usually imported from China) for the DIY market. But in recent years, big hardware retailers such as Bunnings and Mitre 10 have begun sourcing products directly from China.
Bunnings cut back its GMC range in 2007 and dropped the company completely earlier this year when it signed an exclusive deal to be the only stockist of Ryobi in Australia. Mitre 10 is also reported to have cut back on the shelf space offered to GMC.
The loss of the Bunnings sales cut revenue to $190 million in 2007-08. Receiver Leanne Chesser from KordaMentha says the company still has a turnaround $100 million.
She is hoping for a quick sale of the business. Corporate advisory firm Kidder Williams, which was appointed in October to find a buyer for GMC, will continue to assist in the sales process.
“Our objective will be to sell the business as a going concern and we are seeking immediate expressions of interest,” Cheeser said in a statement.
“We expect a sale to be completed in the short term.”
Back in October, Tim Faulkner of Kidder Williams told SmartCompany there had been strong interest in GMC, with a rival tool company such as Ryobi, Bosch or Black & Decker considered the most likely buyers.
Hosking and D’Antonio met at tool company Black & Decker. Shortly after Hosking left that company in 1996, he was asked by a hardware retailer to fill a space in its Father’s Day catalogue. Hosking imported some drills from China and GMC was born.