Privet investment prevents ‘immediate collapse’ of PoleStar Foods
PoleStar, which supplies supermarkets with own-label desserts and Heinz branded products under licence, was formed in December 2009 following the acquisition of Heinz’s UK frozen desserts business, with financial backing from Bank Leumi (UK) plc.
It operated from two sites, in Leamington Spa in Warwickshire and Okehampton in Devon.
The firm, which has already made almost 200 staff redundant over the past year, hit the headlines earlier this month after FoodManufacture.co.uk revealed that chief executive Keith Ellis had stepped down following disagreements with the chairman and board.
Suppliers had also contacted this publication complaining about late payment.
Consolidation at Okehampton
In a statement issued this morning, PoleStar said Privet had acquired 100% of its equity, while Centric Commercial Finance had provided facilities to support the buyout and growth of the company.
"Privet’s investment in Polestar hasprevented the immediate collapse of the Company and has secured 255jobs [at Okehampton]."
It added: “Polestar is being restructured to consolidate its operations into its Okehampton Desserts subsidiary. KPMG has been appointed as administrator for its Leamington Desserts Ltd subsidiary.”
The Leamington Spa site employs just over 160 people, who now face an anxious wait to see if KPMG can find a buyer.
KPMG is seeking to "stabilise the business and begin seeking a going concern sale" said Will Wright, joint administrator."We have already had some expressions of interest in the business."
PoleStar commercial director Sue Garfitt told FoodManufacture.co.uk that the business had been loss-making when PoleStar had acquired it from Heinz, and that it had “always been a risk”.
Unlike Heinz, however, PoleStar had been unable to cross-subsidise the firm with profits from other businesses when times became tough, she added.
“We felt that we could restructure the business to operate profitably but fundamentally what we did was not sufficient.”
Turnaround?
Privet’s investment in Polestar would accelerate the turnaround of the company with the aim of significantly growing its Okehampton site over the next 24 months, said Privet director Ian Astley.
“Privet’s investment will support Polestar’s working capital requirements at Okehampton. It will also provide the company with a renewed focus, increased financial strength and a clear strategic plan, thereby ensuring that it is well placed to continue as one of the UK’s leading manufacturers and providers of frozen desserts for many years to come.
“Despite exhaustive efforts in considering the future of the company, regrettably, we have been forced to appoint administrators to the significantly loss-making Leamington factory. We look forward, however, to working with Polestar and enabling the company to realise its considerable potential.”
Not fit for purpose?
Garfitt told FoodManufacture.co.uk last month that a recent round of redundancies at Leamington Spa was due to a switch from a two-shift system to a one-shift system in January.
The changes were part of an ongoing "realignment" to better match labour scheduling with sales that had been taking place since the takeover last December, and did not reflect the loss of any major contract, she said.
She added:"We inherited a structure that was not fit for purpose. But on the customer side, we have been working with all of the major supermarkets on new Christmas launches.
"We've got some new lines for M&S and the Co-operative, a new line for Iceland, some new business with Asda and some relaunched products for Sainsbury's in the Taste the Difference range.”
