Australia’s second largest pearling company has collapsed, with the company struggling under the weight of its $5.5 million debts.
The Northern Territory-based Ellies Pearling Company was placed in administration in February and insolvency firm HLM Mann Judd have appointed Bob Jacobs and Kim Wallman as joint administrators.
In a letter to shareholders dated February 27, the administrators said the company collapsed because of its debts.
“The company directors placed the company into administration due to an inability to pay the debts as when they fell due,” the letter says.
Get daily business news.
The latest stories, funding information, and expert advice. Free to sign up.
“Presently we are operating the business on a “care and maintenance” basis. At this point, we are unable to comment with any clarity as to what your shareholding may be worth, if anything,” the letter says.
Administrator Bob Jacobs told SmartCompany Ellies Pearling Company owes creditors over $5.5 million. The company has three secured creditors who are owed over $5 million in total, and unsecured creditors are owed just over $500,000.
The pearling company is now up for sale, with an advertisement placed in The Australian Financial Review today calling for expressions of interest.
Ellies Pearling Company has operations in Elizabeth Bay in the NT and assets for sale include pearl oyster stock, the plant and equipment, pearling licenses, quota and extensive leases and substantial quantities of unseeded pearl oysters.
“Expressions of interest are sought for an equity partner to maintain the business as a going concern or for the sale of the company’s assets,” the advertisement says.
The administrators are operating the company under a “care and maintenance” basis to keep the assets in good condition.
“We can’t sustain keeping all the employees employed, but we’ve spoken to management and pearling experts and we’ve got a group of about 12 people still working at the farm to make sure there is no deterioration of the asset value,” Jacobs says.
The company originally had 44 employees.
Jacobs says they’ve had expressions of interest, some from other pearling operators.
“We’ve had several expressions of interest and we’re looking at a restructure at this point rather than a straight sale of assets,” he says.
Ellies Pearling previously operated as Arafura Pearls, but Arafura Pearls was placed in liquidation in 2011 and the administrators KordaMentha sold the company to the current owners.
Jacobs warned the operation was expensive, saying “pearl farming requires a significant amount of working capital for only one harvest a year”.