‘Unsustainable cash flow issues’ has caused the administration of flooring backing yarn producer Bonar Yarns, just months after it forecast it was poised to take advantage of increased demand for recycled products.
FRP Advisory has been appointed as administrator and is trying to find a buyer for the £6.7m turnover company, which saw a management buy-out in 2020.
In its latest accounts for the year to 30 November 2022, filled on 23 January, director and majority shareholder Raymond Denyer says: ‘The specific economic conditions caused by the COVID-19 health emergency, and the current global macro environment, have continued to have an impact on our markets, again affecting the level of demand for the company’s products. With this in mind, the company has continued to invest in significant capital expenditure again in 2022, with a focus on recycling, net-zero targets and sustainable yarn production. Our end markets’ demand has moved to recycled requirements, so the company is already taking advantage of this. We have also successfully developed new niche products, building on our years of extrusion experience, and this has initially proven very promising. Power costs were a significant problem in 2022, with UK power prices reaching unprecedented levels. This has adversely affected our results, but the new capital expenditure has significantly reduced our daily energy consumption, and we will see the further benefits of this in 2023.The company is profitable, and has positive net assets.’
FRP Advisory has retained the company’s 61 staff.
‘We will continue to trade the business in the short term whilst marketing the business and assets for sale with immediate effect, and would urge interested parties to contact us as soon as possible. Bonar Yarns is highly regarded for its excellence in carpet yarns innovation, so we are hopeful that the business will be of interest to a company already operating in the broad coverings market or an entrepreneur keen to enter the market by acquiring an established brand,’ says Michelle Elliott, joint administrator.
