Mayflower bows to the inevitable
Mayflower, the ailing bus builder, finally collapsed under its weight of debts last night, calling in administrators from the accountancy firm Deloittes.
The failure of the company, which until last year included the former Prime Minister John Major on its board, looked increasingly inevitable.
On Tuesday, Mayflower suspended its shares and warned that current negotiations with its lenders were unlikely to prove successful. The suspension followed the ousting of its three top directors and the disclosure of further accounting irregularities which had the effect of increasing its net debts to £196m.
The businesses placed in administration are the parent company and its three main UK subsidiaries, Transbus International, Mayflower Vehicle Systems and the group's management services business. Mayflower's US and German subsidiaries and its fledgling UK energy business have not been put into insolvency.
The arrival of the administrators puts a question mark over Mayflower's 3,300 UK employees. However, the lead administrator, Nick Dargan of Deloittes, said there were some excellent businesses within the group. "We are in the process of having discussions with all stakeholders including customers, suppliers and employees and will strive to preserve value within the group", he said.
Mr Dargan said his aim would be to ensure that Mayflower, whose chief executive John Simpson is leaving the company after pressure to quit, continued to operate with minimum disruption while buyers were sought. The administrators are almost certain to have talks with Melrose, the cash shell run by three former Wassall executives, which disclosed on Monday that it was contemplating a Mayflower bid.
Transbus is the UK's leading bus builder with 2,640 employees at eight UK sites. Mayflower Vehicle Systems, which makes body panels for car companies, employs 700 people,
The collapse of the company has been caused by the build of debt used to finance previous acquisitions, including that of its rival, Dennis. A total of £70m of debt was due for repayment next January with a further £90m due the following January.
The final straw for the company's banks was Monday's disclosure of fresh accounting problems relating to its failure to pass on £20m in payments from suppliers to finance providers. The practice had been going on for a number of years.
Mayflower was once worth £985m but when shares were suspended on Tuesday at 6.25p, its value had fallen to £22m.
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