Creditors to vote on AEI Cables proposals

AEI, which claims to be the oldest cable company in the world, was established in 1929, and remains a significant employer in Birtley

AEI Cables in Birtley, near Chester-le-Street
AEI Cables in Birtley, near Chester-le-Street

The future of a North East cable maker, struggling to pay off its debts, could depend on talks with creditors, scheduled for the end of the month.

In 2011, AEI Cables could have faced administration and has since been kept afloat through a Company Voluntary Arrangement (CVA).

However, tough trading conditions mean the 84-year-old firm is now asking for creditors to approve changes to the rate at which it pays back what it owes.

If the vote goes against the company at a meeting scheduled for August 29, it will have to meet with the original arrangements – or ultimately face liquidation.

AEI, which claims to be the oldest cable company in the world, was established in 1929, and despite laying off more than 100 workers two years ago, remains a significant employer at Birtley.

The business currently provides cabling for numerous industries, including construction, defence, mining, oil, gas, fire protection and rail.

Under the CVA, the company has been allowed to trade under the control of the directors, while handing over 65% of its net profits to the joint supervisors Peter Kubik and Michael Kiely of UHY Hacker Young accountants, over a five-year period.

It was originally estimated this would equate to £3.5m and the company agreed to pay a minimum of �360,000 in voluntary contributions per year, on the understanding the agreement would only be completed when all unsecured non-preferential creditors had received a minimum dividend of 30p in the pound.

To date, £665,770 has been paid, but AEI, which is three months in arrears and reported a loss in the year ending March 31, of £2.4m, predicts it will a negative cashflow balance of over £9.2m by June 2014.

The company is therefore proposing that it changes its monthly contributions from £30,000 to £10,000, and that both the 65% of profit requirement and the 30p dividend requirement be removed.

It also suggests the CVA could be brought to an end before the predicted 35 months, should the company be able to introduce new working capital to do so by an earlier date.

The total still to be paid is £440,000.

In a report submitted to Companies House, Kubik said: “I am of the opinion that the proposed variation is a fair proposal under the current circumstances and, having taken into consideration the adverse trading conditions that the company has been faced with.”

No one from AEI was available for comment.

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