THE future of the 800 employees of North-east Scotland's best known
business, Norco, is in the balance after the Co-operative Wholesale
Society (CWS) rejected a merger bid.
Bank support has been withdrawn as a result and after more than 130
years of trading, Norco has been granted approval at the Court of
Session to call in a provisional liquidator.
The financial difficulties of Norco (The Northern Co-operative
Society) became clear last spring when chief executive Mr Robin Pollock
left following the announcement that the company had a deficit of #7.4m.
This was blamed on a combination of major expansion projects, high
interest rates, and property revaluation. Norco also had #30m of
borrowings.
Last summer Norco's 60-year-old dairy operation was sold as were the
five pharmacies the company operated.
In February this year superstores in Westhill, Banchory, Elgin, and
Ellon were sold to the Argyll Group for more than #15m.
Two months later the Scottish Co-operative Society paid around #15m
for the jewel in the crown, Norco's Berryden superstore which has been
at the heart of the empire since it moved from its original Loch Street
sites.
That left the company with its leased Dundee superstore, understood to
be a substantial loss-maker, an enormous warehouse at the Altens
industrial estate in Aberdeen for which it no longer had any use but had
a 30-year-lease, an electrical and home furnishing store at Berryden
where it also owns considerable land, and 20 convenience stores.
When the superstore was sold it was said that what remained was a
smaller more viable business. However, at the end of May it was revealed
that Norco had made a formal application to merge with the CWS.
Yesterday CWS told the Norco directors it was declining the
application.
''Pending this decision the society has been able to continue its
activites with the support of its bankers,'' a spokesman said. ''It has
not proved possible to obtain future bank support at the level which was
required.
''In these circumstances the Norco board of directors, having taken
professional advice, concluded that it had no alternative but to seek
the appointment of a provisional liquidator.''
It petitioned the Court of Session and the appointment was granted
yesterday.
''The outcome of these recent negotiations is of immense regret to the
board of directors, particularly after the substantial progress that had
been made over past months in reducing the society's debt levels,'' the
spokesman said.
''Share capital, development bonds, and small savings accounts
invested in Norco are covered by the Co-operative Deposit Protection
Scheme (CDPS). This scheme, with support from the CWS, will ensure that
individual investors will, in due course, receive full repayment of
their capital.''
To help their 20,000 shareholders and investors the CDPS has opened a
free telephone helpline on 0800 592424 which will be open during
business hours on weekdays.
Of the 800 employees, 450 are part-time.
Last night SNP Banff and Buchan MP Mr Alex Salmond said it was ''a
tragic conclusion to the financial mess Norco got itself into.
''Just a few months ago they had some of the best retailing outlets in
the North-east and now there's nothing.
''I am extremely disappointed the co-operative society nationally
could not have done more to safeguard the 800 jobs now at risk. They
were full of praise for Norco during its expansion in the late 1980s and
now, with hindsight, proclaim that Norco overstretched themselves.''
Yesterday Lord Cameron of Lochbroom granted the petition presented by
Norco which indicated it had net liabilities of #3,655,386. The petition
asked that Mr Ian Souter, chartered accountant, of Huntly Street,
Aberdeen, and Mr Douglas Beedie, chartered accountant, of Constitution
Street, Dundee, be appointed joint provisional liquidators.
HAWICK Knitwear manufacture Lyle and Scott yesterday announced 70
redundancies in its 434-strong workforce. The firm, part of Courtaulds
Textiles blames increasingly difficult trading conditions.
The phased pay-offs will begin almost immediately, with 55 jobs going
at the Hawick factory, and the remaining 15 at the Kelso branch. Lyle
and Scott chief executive Andrew Thatcher said: ''Trading conditions in
Europe are particularly difficult. It is essential to bring capacity and
costs in line with viable demand.''
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