Investors and workers welcome Havelock deal

the Havelock Europa premises in the John Smith Business Park, Kirkcaldy

Shares in loss-making Fife furniture maker Havelock Europa soared yesterday as the firm announced it had secured a multi-million financing deal.

Shares in the Kirkcaldy-based firm spiked as the funding news was also welcomed by the union GMB Scotland, which represents more than 90 of the firm’s employees.

The funding is the latest step in the turnaround strategy implemented by chief executive Shaun Ormrod, who joined the group in September following the resignation of David Ritchie.

The company recorded a pre-tax loss of £2.6 million for the first six months of last year and yesterday’s trading update revealed the firm expected to continue to be loss making in the second half of the year.

However, it said the second half of 2017 was a “substantial improvement” over the first six months.

Havelock has reached agreement in principle on a package of funding which includes an extension of existing senior debt facilities of £5 million for a two year term.

Additional subordinated debt financing of £3m is in place for six years.

The deficit reduction contributions payable to the company’s pension scheme have also been revised.

The company said: “The effect of the changes, whilst in aggregate negatively impacting Havelock’s profit and loss account by approximately £0.5 million per annum for the next two years, will be to provide sufficient funding to support the delivery of the new strategic and short term operational plan.”

GMB Scotland secretary Gary Smith said the funding package helped secure the future of the company.

He said: “GMB Scotland is delighted that a lifeline has been secured that gives the plant in Kirkcaldy a fighting chance for the future.

“We know the new senior management team have been talking to banks and government to secure the future of the business and our union has been doing what we could to help in them process in order to protect our members’ jobs.

“All parties involved, including the Scottish Government, have done their bit to help secure vital skilled manufacturing jobs for the local economy – a beam of optimism in difficult times for Fife.”

Mr Ormrod has previously announced his plans to return Havelock to profitability this year with a “reorganised business base with circa £60 million of revenues”.

Yesterday he said: “2017 was a difficult year for Havelock but we have begun 2018 with the business fully aligned behind the new plan we set out on 31 October 2017.

“With a renewed commercial focus and with the backing of our funders, I am confident that the business can return to a position of market leadership in the medium term.”

The firm’s shares closed up 0.6 pence at 4.4 pence.