Blair Nimmo and Tony Friar of KPMG were appointed joint administrators of Tullis Russell Papermakers Limited today at the request of the company’s directors.
A total of 325 employees have been made redundant with immediate effect. The remaining 149 have been retained to complete work in progress.
In the year to 31 March 2014, the company sold 126,000 tonnes of paper and board. It recorded a turnover of £124.6m, but suffered a pre-tax loss of £3.4m. It has incurred cumulative losses of £18.5m over the past five years, largely as a result of weakening demand and pressure on its margins.
Tullis grades included Advocate, Mellotex, Naturalis and Trucard.
A statement released by the administrators today named the market’s long-term decline as media and other outlets increasingly move online, leading to worldwide oversupply and price competition, as a major factor in the company’s administration.
This was coupled with the higher cost of wood pulp and the loss of a major customer due to insolvency – understood to be Paperlinx.
Sterling's strength against the euro also hit the company’s sales in Europe.
The employee-owned company was founded in 1809 and produces high-quality paper board for use in cards, covers and premium packaging.
Based in Markinch, Fife, it had 474 employees, 471 of which were based at Markinch and three operating remotely throughout the UK.
It has made a number of attempts to widen its product and customer base and improve the efficiency of its operations in recent years.
Just last month a £200m biomass plant that started operating in March 2014 was officially opened on the site. It was built in partnership with RWE Npower with the aim of reducing Tullis Russell’s energy costs.
But despite these efforts the company continued to run at a loss and had significant cashflow issues, the administrators said in a statement today.
“Recognising the structural changes in the industry and the need for consolidation, the directors took steps in October 2014 to seek a buyer for the business. This process continued until this month, but ultimately no party was found.
“The directors therefore concluded that they must act in the best interests of the company’s creditors and take steps to appoint administrators,” the statement read.
Joint administrator and head of restructuring for KPMG in Scotland Blair Nimmo, said: “This is a sad day for the employees of Tullis Russell Papermakers, who have worked hard against the significant headwinds facing the global papermaking sector.
“Whilst we will be exploring whether a sale of all or part of the business and assets of the company can be achieved, we have had to take steps to significantly reduce the company’s overheads.
"Unfortunately, with trading effectively ceasing, we have had no option but to reduce the size of the workforce. We will be working with government agencies to minimise the impact on employees. We would encourage any party with an interest in acquiring all, or parts, of the business to make contact with us as soon as possible."
Tullis Russell Papermakers Limited is a wholly owned subsidiary of Tullis Russell Group Limited. The Group’s Coating business based in Bollington, Cheshire and its Image Transfer business based in Ansan, Korea are not affected by the administration and continue to trade as normal.
More to follow...
