An eleventh hour bid to buy Yuill Homes out of administration for £1.4m collapsed after the proposed purchaser ran out of time to secure a required clearance statement, a report has revealed.
A team from Baker Tilly had been put in place in February after the firm fell into difficulties, and they were hopeful the 87-year-old company, which is headquartered in Hartlepool, could have been saved after receiving interest from several parties. Originally established in 1927, Cecil M Yuill Ltd traded as Yuill Homes and was acquired by Newbridge Enterprises Ltd in 2008 by former directors of Yuill and the Bank of Scotland.
A progress report compiled by joint administrators Steven Ross and Ian Kings of Baker Tilly reveals how, at its height in 2005, the business had profits of £11.2m on turnover of £58.5m and 120 employees.
However, as a result of the downturn in the housing market and a “changing attitude to funding from mainstream lenders”, the company went through significant difficulties and had to make new banking arrangements with the Bank Of Scotland in April 2013.
Newbridge entered into a £25m term loan facility giving the business working capital of £4m, made available until January 2014, but the Bank of Scotland made it clear the group should explore other options.
The report says the firm found “only reluctance to invest in house building”, leading to private investors VBTH Ltd acquiring outstanding debt on June 20 2013.
Last accounts have not been officially verified but it is estimated turnover for the year to December 31 2012 actually rose by almost £10m, from £22.58m in 2012 to £32.1m and losses were also shortened, from £3.3m to £1.6m. Despite the healthier sales position the report said the company had not had sufficient funding to buy new land and pursue developments since 2008, and by December of last year it had completed nearly all of its remaining developments.
As of January 31 2014 the company owned only two areas of land for future development and a further nine plots for completion/sale on an existing development.
Conscious of the uncertain financial position and the pending loan repayment, to be made on January 30 2014, Baker Tilly were then brought in. Private investors VBTH Ltd agreed to continue the funding stream while the firm continued to trade as Baker Tilly sought a buyer, and the progress report reveals there was great response to a “business for sale” flyer issued. A deadline was extended to March 14 because of the level of interest and, in all, 12 interested parties were issued with access to an online data room to view information.
Three offers were received and an offer of £1.4m for the business and assets, from a party connected to VBTH, was accepted by the joint administrators. The report said: “The offer was subject to the proposed purchaser obtaining a clearance statement from the Pensions Regulator. Such a statement is not an approval, rather it gives assurance that the Regulator will not use anti-avoidance powers in relation to the transaction. Unfortunately it was not possible to conclude the application for a clearance statement in the timescale required by the proposed purchaser and, as a result, the offer was withdrawn on March 31.”
A spokesman for Baker Tilly added: “We were hopeful we could reach a sale having received a lot of initial interest but there are never any guarantees. Now it is a case of realising any assets for the benefits of creditors.”