Poolrite goes into liquidation: sale to AstralPool expected

A meeting of creditors has voted to liquidate Poolrite Australia and Poolrite Research and continue the well-advanced negotiations to sell the assets to AstralPool Australia.

Poolrite creditors met on March 26 to decide whether to accept the deed of company arrangement (DOCA) proposed by Evolve, on the understanding that if the offer was rejected the company would be wound up and the offer by AstralPool Australia would be pursued.

AstralPool had already provided a formal sale contract with a binding offer, but at the time of writing some details still needed to be finalised. The administrator, David Stimpson of SV Partners, had hoped for a signed contract by the time of the meeting but due to the complexities of the contract that was not possible. However, he said he was confident the sale would proceed.

The administrator recommended the creditors turn down the DOCA proposal, liquidate the company and sell the assets to AstralPool.

The main reason for supporting this course of action was practical: the primary creditor, Westpac Banking Corporation with a secured claim of more than $8 million would not support the DOCA proposal, meaning that it was unlikely to go ahead in any case. The liquidation and sale means the banks will get paid more quickly.

Another important advantage of the sale is that staff will get paid more quickly and in full.

The AstralPool offer is worth $7.5 million, with $4.5 million to be paid on settlement, followed by two payments of $1.5 million in three months and six months respectively. Of that, AstralPool will pay approximately $1.7 million for stock which will be used to pay staff entitlements in full by May 2013.

The administrator recommends that any staff put their claims in as a quickly as possible. Whether they are paid by the government scheme or the sale will depend on timing, but he says they will be paid one way or the other.

Unsecured creditors, apart from the priority creditors (that is, staff) will not receive any payments. However, SPLASH! understands that AstralPool will maintain a manufacturing facility in Brisbane and will continue to use existing Poolrite suppliers.

Although the DOCA would have provided for unsecured creditors to get paid, that would only have occurred after Westpac had received $5.7 million, the Commonwealth Bank $800,000 and staff $1.5 million. These funds would have come from annual royalties at a rate of 3 per cent of turnover, so it could have been many years before the unsecured creditors saw any money. Now that Poolrite has gone into liquidation, unsecured creditors will be able to attempt other avenues of recovery.

As with the AstralPool offer, the proceeds of the sale of stock would have gone towards staff entitlements, to be paid by June 2014.

Additionally, as part of the DOCA, the company director Ross Palmer was to contribute $900,000 to Westpac from the sale of the Poolrite Europe property in France, in exchange for being released from personal guarantees to Westpac and other parties. It is unlikely that much if any of this money will be paid, now that the DOCA has been rejected.

Negotiations progressing

"I suppose the worst kept secret in the Australian pool industry is now official," says AstralPool Australia MD Peter Wallace. "AstralPool are in negotiations to purchase the assets of Poolrite.

"The vote against the DOCA proposal from Evolve and the creditors' decision to put both Poolrite Australia and Poolrite Research into liquidation means we are a step closer to acquiring the assets of both companies. We are negotiating the terms of the contract of sale and subject to any last minute problems, hope to expedite the execution and settlement within weeks. This will be good news for ex-Poolrite staff waiting on their entitlements," he says.

Wallace says that Poolrite and some of its other brands are very strong in parts of Australia, the company had some very good products and some excellent marketing, and he aims to make the best use of Poolrite's strengths and assets.

"We believe that AstralPool's distribution throughout Australia and around the world through our parent company Fluidra gives the Poolrite brands and products the best opportunity to reach their full potential," he says. Fluidra has a presence in more than 130 countries.

"The demise of such an old and well established company like Poolrite is always sad and hurts a lot of stakeholders. Poolrite's failure is reflective of the difficult economic times we find ourselves in. However, AstralPool has the strength and fortitude to rebuild the brand and products that made Poolrite so popular over so many years."

SPLASH! will update this story when more information comes to hand.

Meanwhile, Evolve has confirmed it will remain in the swimming pool and spa industry.