£6.7m-turnover yarn manufacturer seeks buyer after entering administration
Wed, 05 Apr 2023 | ADMINISTRATION
Administrators are seeking a buyer for the business and assets of Bonar Yarns, a yarn manufacturer based in Dundee. The company, which can trace its roots back 120 years, appointed Michelle Elliot and Callum Carmichael of FRP Advisory as joint administrators due to “unsustainable cash flow issues”.
The company, which was acquired in 2020 through a management buyout, is headquartered at Caldrum Works. The firm specialises in polypropylene carpet backing yarns and covers an array of markets, including artificial sports turf, sustainable flooring and outdoor flooring.
Bonar Yarns reported turnover of £6.7 million in its most recent accounts, covering the year ending November 30 2022, up from £6.3 million a year earlier, but saw its operating profit fall from £250,000 in 2021 to £214,000.
In the accounts, director Raymond Denyer said that the firm’s markets were continuing to be impacted by COVID-19 and “the current global macro-environment", which had taken a knock-on effect on demand for its products. As a result, the company had sought to invest in recycling, sustainable yarn production, net-zero targets and the development of “new niche products, building on our years of extrusion experience”.
Despite reporting that rising power costs had adversely impacted the company’s 2022 results, Denyer said that the new capital expenditure had “significantly reduced” energy consumption and that further benefits were expected to be seen during 2023. However, the company’s cashflow issues ultimately led to the appointment of administrators, who will seek to find a buyer to rescue the business.
Joint administrator Michelle Elliot commented: “Bonar Yarns Limited can trace its history back to the foundation in 1903 of the famous Low & Bonar business that specialised in the manufacture of technical textiles. Following a management buyout, the business focused on developing and marketing innovative yarns for a variety of different floor covering and artificial sports turf markets.”
“We will continue to trade the business in the short term whilst marketing the business and assets for sale with immediate effect. Bonar Yarns is highly regarded for its excellence in carpet yarns innovation, so we are hopeful that the business will be of interest to a company already operating in the broad coverings market or an entrepreneur keen to enter the market by acquiring an established brand.”
In its results to the year ending November 30 2022, Bonar Yarns’ fixed assets were valued at £1.6 million and current assets at £5.5 million, while net assets amounted to slightly over £3 million.
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