Perseverance Mills Ltd., the United Kingdom-based manufacturer of Pertex brand fabrics, has been placed in receivership (the equivalent of Ch. 11 bankruptcy protection here in the United States). PKF accountants have been appointed as administrative receivers and are actively working to find a buyer for the company, according to an official company news release.
SNEWSÂ® has learned that while Pertex as a brand has reportedly been doing very well on the global market (70 percent of Perseverance's sales come from exports, of which Pertex makes up a majority share), the company has been weighed down by a mountain of debt and a struggling part of the Perseverance business not widely reported.
The current owners of Perseverance raised eyebrows a few years back when they purchased the company from the Scapa Group, assuming not only the assets, but also a significant portion of the debt. That debt, combined with a pound that lagged against both the surging Euro and the struggling dollar, created a situation that was not generating returns sufficiently quick enough for the bank.
In 2002, a financial analyst report we obtained placed annual sales volume (turnover) for Perseverance Mills at 15 million pounds (USD $28.5 million). Sales for 2004 have been reported at 12 million pounds (USD $22.8 million).
The decline in sales seemed curious given that Pertex has been publishing glowing releases of sales over the last several years, and given the fact that Pertex is a significant supplier of fabrics to Gore Europe.
We contacted Perseverance and were told by Helen Isherwood that, "The Pertex, Gore and Blue (parachute fabrics) parts of the business have been doing very well. However, there is another part of the business that weaves nylon impression fabrics (for printer ribbons). This used to be a very important part of Perseverance Mills' business and whilst we always knew that this business would be affected by advancing technology, it has declined much quicker than forecasted."
Perseverance Mills, founded in 1901, has 205 employees, all of whom are now waiting to find out what, if anything will happen to their jobs.
The company has stated to is customers and to SNEWSÂ® that production and shipment of product will not be affected in any way by the receivership process.
SNEWSÂ® View: While the press release and news reports from the U.K. indicated that the directors of the company were actively seeking to sell Perseverance before the company was placed in receivership, you can read between the lines easily here and see that no company was willing to purchase the company and assume both the assets and the debt. That left the company with no choice but to eliminate the anchor around its neck and opt for bankruptcy protection.
Now, buyers for the company will be able to acquire a business that is doing very well on the performance fabrics side. Brands that currently feature Pertex fabrics as part of their offering include: Haglofs, Valandre, Buffalo Systems, Mammut, Bask, The North Face, Marmot, Macpac, Salewa, Carinthia, Montane, Berghaus, EMS, Kathmandu, Joutsen, Integral Designs, Force Ten, Mountain Equipment, CAMP, Rab, Exped, Western Mountaineering and Cumulus.
No word on what this will mean for the employees. No word either if any of the buyers considering a purchase would move the company out of the U.K. -- a sad fate to consider for the venerable U.K. brand. We would suspect, though, that any buyer has to be looking at taking at least a portion of the manufacturing business to Asia. There is no ducking the reality that unless the company is able to lower production costs -- and insiders tell us that the company is acutely aware of this -- then it will not be able to sustain growth and remain competitive on the global market.