Penrice deal falls through; 95 jobs go
Almost 100 jobs will be lost at the Penrice chemical plant in Adelaide after a potential buyer pulled out of the deal.
Administrators for Penrice, which owned the Osborne plant, had been negotiating a sale with an unnamed buyer since April.
But that deal has fallen through, meaning the plant will close and it 95 staff will be made redundant.
The buyer blamed uncertainty about the future profitability of the plant, the expenditure required to achieve profitability and ongoing environmental issues contributed for its decision to pull out, administrators McGrathNicol said.
Negotiations are continuing for the sale of Penrice’s limestone quarry in Angaston, where operations continue as normal.
Alternative ways to realise some value from the Osborne plant will now be pursued, McGrathNicol said.
You might like
Creditors remain in limbo with a court-endorsed moratorium on legal action in place at least until the next scheduled meeting of creditors on July 24.
One of those creditors is the State Government which gave the embattled chemicals manufacturer royalty relief.
The relief decision – involving an estimated $280,000 – was not disclosed to shareholders or taxpayers and is unlikely to ever be recovered.
Penrice, an outspoken critic of state and federal government taxes, paid $275,000 in royalties to the state in 2012 and $273,000 in 2013, its annual reports show.
“The government did what it could to help Penrice Soda,” Koutsantonis told State Parliament last month.
“Given the long list of people seeking redress through proceedings that are in place now, I am not sure what the total amount of forgone royalties will be, but I will get that amount and get back to the house. The government makes no apology for doing that.
Stay informed, daily
“The government has very few tools at its disposal to help companies like Penrice Soda. The one that we could introduce very, very quickly, which is very effective, was royalty relief. I think that was a very good measure.”
Penrice Soda went into administration on April 10.
The company faces debts of around $200 million and hasn’t made a profit for years.
It owns an ageing processing plant at Osborne, one of the oldest chemicals manufacturing sites in the state, on the edge of the Port River.
Penrice’s only valuable asset is a limestone quarry at Angaston which has attracted some buyer interest.
Asked if the state had any prospects of recovering its royalties, Koutsantonis offered little hope.
“In terms of our ability to regain those forgone royalties, I have to seek more advice, but it does not look good, given the state of what is being told to creditors now.”
It now appears that he was right.
Want to see more stories from InDaily SA in your Google search results?
- Click here to set InDaily SA as a preferred source.
- Tick the box next to "InDaily SA". That's it.
