James Crean has run into further financial difficulties and will be unable to meet its commitments to its bankers. In a statement to the Irish Stock Exchange yesterday evening, the company said it was seeking immediately to reschedule its $40 million (€45 million) debts due to a further slump in its US frozen meals and canned poultry operations.
The directors have decided to make a £7.5 million (€9.52 million) provision in its 2000 accounts to cover potential losses.
James Crean chairman and chief executive, Mr Ray McLoughlin, and other board members have been reviewing the business and have come under pressure from long-suffering shareholders to provide an exit mechanism for them.
According to the statement, the board has been looking at arranging an offer for the company and has entered discussions with a potential purchaser.
These are progressing but remain at a tentative stage. "There can be no assurance that these discussions will result in an acceptable, or any offer, being made for the company."
The directors indicated that if an offer was made it was unlikely to exceed a price of 35 cents a share. The shares hit a trading low for 2001 of 18 cents before the announcement. They last traded at 35 cents in February 2000. At yesterday's price James Crean's stock market value was €8.1 million.
A price of 35 cents a share would value James Crean at €15.8 million (£12.44 million). The directors will have to work hard to push its value anywhere close to this level.
Its businesses have been restructured in the past couple of years, with the print and packaging division being de-merged into a separate company called Oakhill. This left James Crean solely reliant on the US food market.
Its interim results indicated a downturn in the frozen food and poultry businesses but suggested the full-year out-turn would be inline with expectations.
In the first three months of 2001, sales and distribution of its business lines have declined even further, with the company blaming an over supply of broiler meat and historically low prices for its woes.
As a result, James Crean will not be able to meet bank repayments due on March 31st and has stated that these difficulties will continue for the rest of 2001. The directors believe the £7.5 million provision will cover any potential liabilities that will arise although this may be revised upwards. "This provision is a preliminary estimate of the directors and is subject to change following further internal review and external audit," it said.
Following the review of its operations the directors have now decided that generating an offer for the group is the most realistic option to facilitate shareholders who want to sell their holdings. A further injection of new funds has been ruled out because of weak stock market sentiment and the disimproving trading prospects for the company, as has a share buyback.
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