Powerscreen sells debt-hit Matbro

Powerscreeen International has confirmed that it has sold the business of its debt-ravaged Matbro subsidiary to the US engineering group, John Deere, for £7 million sterling. The price is marginally higher than was expected when The Irish Times first reported the plan to sell Matbro late last month.

Powerscreen has also stated that the investigation by company auditors KPMG into the losses at Matbro has confirmed the provision that Powerscreen has taken against the £46.6 million losses at Matbro. But the company goes into no further detail on the mispricing which led to those losses.

The KPMG report is also being considered by outside auditors, Price Waterhouse, which will have to complete its review of the KPMG report before a report on the Matbro debacle is sent to shareholders.

Irish institutional investors will scrutinise this final report closely, as these institutions contributed £18 million to a Powerscreen rights issue, six weeks before the Matbro debacle became public and long after it was known in the trade that Matbro was going through difficulties.

Standard Life has also suggested that if it emerges conclusively that Powerscreen management was aware of the difficulties at Matbro before it began the £18 million placing, then institutions which bought shares in the placing would have a case for some sort of repayment.

John Deere was always one of the few potential buyers of the Matbro business, and as a result has been able to pick and choose the parts of the business it wanted and the parts it wanted to leave with Powerscreen.

In effect, John Deere has bought the trouble-free parts of the business Matbro's designs, work in progress, intellectual property rights and some specified engineering equipment and will now manufacture the former Matbro telescopic loaders at its own plant in Germany.

Powerscreen has been left with Matbro's two manufacturing plants in Dungannon where 50 people are employed in Matbro-related work and in Britain where Matbro employs 105 people at a plant in Tetbury, Gloucestershire. A spokesman for Powerscreen said that the bulk of the Matbro staff in Dungannon have been offered alternative positions within Powerscreen.

Powerscreen has been left with Matbro's debtors and creditors, although Matbro's £46.6 million losses have at least been cut by the £7 million sale of some of the assets to John Deere.

Powerscreen has also retained Matbro's spares business. Recently-appointed chief operating officer, Mr Hubert Watson, said: "We considered it essential to safeguard the supply of parts for our existing Matbro customers and dealers throughout the world."