UK: Capital Cooling will continue as a cabinet sales company under the name Capital Cooling Refrigeration Ltd, having been bought by new owners for £300,000.
The news follows last week’s announcement that the Edinburgh-based company’s service division had been closed in a pre-pack administration deal. That deal, administered by accountants KPMG, saw the company’s service division sold to Sound & Vision 2016, a subsidiary of London-based private equity company Rcapital Partners LLP. On December 20, Sound & Vision 2016 was renamed Capital Cooling Refrigeration Ltd.
Alister Mclean, the founder of Capital Cooling, is not involved with the new company, but it is thought that James Anderson, who was appointed MD of Capital Cooling in June, will head the new business.
The £300,000 purchase price included £79,000 for plant and equipment, £220,000 for stock and £1,000 for intellectual property. The new company also has an option to purchase the freehold of the company’s existing £2.24m headquarters building in Broxburn within the next four months.
According to the administrator 44 of 106 employees of the company’s commercial refrigeration division were TUPE transferred to the new owner. One employee has been retained in the short term to assist the joint administrators, Tony Friar and Blair Nimmo, and the remaining 61 employees were made redundant.
While Capital Cooling achieved a profit after tax of £347,000 on a turnover of £16.8m in its last available accounts for the calendar year 2015, KPMG reports that the business subsequently began facing significant cash flow challenges. In the 18 month period ended 30 June 2017, the company posted turnover of £24.7m, with a loss before tax of £5.4m.
This was blamed on overstocking of slow moving cabinets over a number of years (resulting in significant exceptional write downs in stock value) and loss of a number of key service contracts, accounting for around 20% of annual sales.
According to KPMG, a new management team appointed this year identified that the commercial refrigeration division had been delivering steady growth, profit and cash generation over a number of years. However, it says, the service division, whilst historically profitable, was loss making.
The Clydesdale Bank is currently owed around £4.4m.