LIG's plant closures to cost 1,000 British jobs: Durex maker's net assets to vanish
The condoms and film processing group, which has debts of at least pounds 154m, also admitted that its current restructuring, which includes the disposal of its troubled photoprocessing arm as well as the closure of a number of manufacturing plants, would virtually wipe out its pounds 112m of net assets.
It acknowledged this would mean it would need a refinancing, but said that the timing, and whether it would involve a rights issue, would not be decided until the outcome of its attempts to sell its non-core businesses was known.
But Nick Hodges, chief executive, insisted the company was not in breach of its loan covenants and had the support of its bankers.
The UK redundancies stem from the closure of two plants - Chingford, with the loss of 600 jobs, and Llanelli, where there will be 240 redundancies.
A further 60 jobs will be lost at the group's health and beauty aids plant at Dundee and around 100 will go at the London head office. But the company gave no sign of where the 1,000 job losses would bite in its plants worldwide.
The closures mean that none of LIG's condoms, including the Durex brand - it has a 75 per cent market share here - will be manufactured in the UK.
Mr Hodges said condoms sold in the UK would now come from the group's Italian and Spanish plants, where investment in automation made production costs much lower.
Many of LIG's problems are traceable to its ColourCare photoprocessing business, which processes film for companies such as Boots, but which has been badly hit by the recession and competition.
This year photoprocessing is expected to lose around pounds 15m, wiping out trading profits from condoms, gloves and health care.
Mr Hodges declined to be drawn on whether progress had yet been made on a sale of the photoprocessing arm, but he promised a statement in June to coincide with the the release of the full-year results to March.
The photoprocessing businesses shows no signs of improving. However, the company indicated a substantial pick-up in operating profits from the healthcare business in the second half, but these were still 'considerably reduced' compared with the same period in the previous year.
Some non-core activities and brands have been sold. A contract has been signed with the Pfizer subsidiary, Unicliffe, for the sale of the UK cough medicines Buttercup, Galloway's and Liquafruta for around pounds 11m. The assets had a net book value of pounds 500,000 and made annual profits of pounds 700,000.
The company is also in talks on the sale of other over-the-counter brands such as Wright's soap, Eucryl toothpowder and Goddard's embrocation oil.
It is pinning its hopes in future on its core businesses of condoms and surgical and household gloves, and says the world branded condom market, in which it has a 22 per cent share, is continuing to grow at 2 to 3 per cent a year.
The company said that Michael Moore, chairman of Tomkins, would take over as chairman from Alan Woltz, who is retiring. The shares fell 8p to 121p.
View from City Road, page 28
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