Two bidders vie for Poolrite
Evolve managing director Ty Hermans has put forward a Deed of Company Arrangement (DOCA) for Poolrite which, if accepted by the creditors, will see some funds returned to non-secured creditors as well as secured creditors.
As previously reported in SPLASH!, an industry manufacturer’s offer to purchase the company was already being considered by the voluntary administrator (VA) and the creditors.
SPLASH! now understands that both offers are to be put to the creditors, chief of whom are Westpac and the Commonwealth Bank. A decision will then be made to choose the offer that provides the best deal for creditors.
Poolrite director and owner Ross Palmer has also separately offered to put forward some funds. While these funds are not directly related to Evolve’s offer, they will form part of the proposal put to the major creditors by the voluntary administrator to sweeten the pot for the financiers.
Administrator David Stimpson says there are two offers on the table – the DOCA put in place by Evolve and the more straightforward sale to an unnamed industry manufacturer.
He says both offers have advantages and disadvantages.
“The straightforward sale will see more money upfront and then some term payments. The Evolve deal will see less money upfront but more money over a longer period of time. Both proposals will be put to the creditors and especially the two financiers who will have the greatest input in determining the outcome. A decision might be reached by mid-March,” he says.
He says that either way, the staff will be paid through the sale while the Evolve deal has the added advantage of seeing some money going to the unsecured creditors, possibly in the vicinity of between 20 and 50 cents in the dollar.
While it is common for a director of a company to put forward a DOCA proposal, it is not essential that the person who proposes the DOCA be a director of the company, and in this instance Ty Hermans from Evolve has put the DOCA proposal forward.
Hermans says there are certain flexibilities in the DOCA that aren’t available in an expression of interest (EOI).
“With the DOCA, I can suggest where funds go and can allocate them to areas such as unsecured creditors, banks, et cetera,” he says. “Also, a DOCA can get changed so in some ways it could be considered similar to having a right of first refusal.”
Under the current terms of the DOCA, Evolve would own the assets but not the business, and the company would eventually go back to Ross Palmer. However, Evolve would own all the IP including patents, brands and trademarks; and equipment, stock and tooling.
Product availability and warranties
Hermans concedes there had been some issues in supply of parts since they began producing Poolrite and MagnaPool products.
“The problem was that most of the tooling was in an inoperable state and we had to repair every injection moulding tool before it could be used,” he says.
Hermans says that now all the tooling has returned from the toolmaker and by mid-March all spare parts will be coming into stock. He also says they had some issues with some of the electrics, which have now been improved.
“We know a lot of customers have been suffering – but we are starting to catch up now. It’s no longer summer so we’re making up ground. We’ve put on more staff – we have 12 or 15 now just on pools, with more from our other resources. Three more started two weeks ago – all ex-Poolrite people.”
He also said they have just put on an experienced customer service staff member, Neita Williams, who will be liaising with Evolve customers.
Hermans says they have raw materials for 2000 MagnaPool systems.
“Regardless of the outcome, we’re in it for the long haul. We had been looking at getting into the pool industry for a long time, then Poolrite came along we brought forward some of our plans. We’ve set up some channels now, in addition to the existing ones we had through hardware chains.”
Hermans says they have plans to build what he calls “bombproof” pool equipment.
“We have an existing product design team and we bring a fresh perspective to the industry,” he says. “People want products that don’t have warranty issues. We’ve mobilised engineers onto new and existing products to make them as simple as possible. We’ve done surveys of end users and what they want is simplicity, reliability and quality. It comes through every time. They just want to enjoy their time in the pool.”
Regarding warranties, Hermans says that anything produced after October 15, 2012 by Evolve is covered 100 per cent by Evolve regardless of the result of the DOCA.
“Previous equipment we’ve been helping out with,” he says. “We’ve been providing parts at cost – and in some cases free – and Allchlor has been producing cells at a discounted rate. We are also establishing a national warranty manager.”
Resellers who have accumulated costs on warranty issues for products manufactured before October 2012 can send proof of debt to the VA and effectively become an unsecured creditor.
