Alan Stewart, chairman of Hansells Masterton, at the Hansells factory. Photo / Lynda Feringa
Alan Stewart, chairman of Hansells Masterton, at the Hansells factory. Photo / Lynda Feringa
The owner of Hansells Masterton believes that after its factory made a loss it was unable to make its loan repayments to Walter & Wild due to the “unsatisfactory pricing” of a production agreement with the company.
Andrew McKay and Rees Logan from BDO were appointed receivers to Hansells.
The company makes a range of well-known household items, including Thriftee juice concentrates, soup-mix brand King, liquid sweetener Sucaryl and common pantry items such as vanilla essence, tartaric acid, black pepper and curry powder.
Hansells director and majority shareholder Alan Stewart has now detailed what he believes led to the company being unable to pay the debt.
Hansells was purchased in 2018 by Walter & Wild, which is 67% owned by Graeme Hart and 33% owned by his son Harrison Hart.
Stewart said that after buying the Hansells Food Group business, Walter & Wild decided to divest Hansells’ branded products and offered them to Hansells Masterton.
Walter & Wild helped finance the purchase of the business after Hansells Masterton couldn’t obtain finance for the purchase from either a bank or other financiers.
Walter & Wild decided to leave the amount owing on terms to be settled over four years at a 10% interest rate.
However, Hansells Masterton was unable to deliver the first loan repayment, totalling $1 million, so the business was placed into receivership by Walter & Wild as a secured debt holder.
Alan Stewart, chairman of Hansells Masterton Limited, at the Hansells factory, covering the words 'Food Group'. Photo / Lynda Feringa
Stewart explained that a condition of the purchase and financing of the business was for Hansells Masterton to manufacture Greggs sauces for Walter & Wild at its Penrose plant in Auckland.
“They offered a production price to make their products based on their supposed labour and overhead costs, which turned out to be totally unacceptable,” Stewart claimed.
He claimed that during the 2024 financial year, the Masterton factory incurred losses in excess of $900,000 “due to the unsatisfactory pricing before Walter & Wild finally agreed to a more satisfactory price”.
Stewart said those losses were only before Walter & Wild agreed to a more reasonable price after Hansells Masterton threatened to stop supplying them.
He also claimed that because of the condition of the plant supplied by Walter & Wild, a further $600,000 was spent to make it operational.
Stewart believes those losses were a key reason why the business couldn’t make the profitability required to meet the loan repayment.
“We offered to pay by monthly instalments together with the interest payments we had regularly made but that was not accepted and has resulted in the receivers being appointed.”
Walter & Wild has declined to comment on Stewart’s claims.
BDO’s Andrew McKay said it was unhelpful to comment on the specific issues raised by Stewart, but said the business was insolvent before the appointment of receivers and “has been for a period of time”.
According to McKay, the company owes significant amounts to employees, trade creditors, the Inland Revenue Department, and secured lenders, although how much is still to be released.
“Due to working capital challenges, the business appears to have become inefficient, with key ingredient outages, and also had a number of low or negative margin customer contracts,” McKay said.
“The receivers’ current focus is working to stabilise the business by working with employees to improve efficiency, customers and suppliers to improve margins and continue trading while we undertake a sale process.”
McKay said the aim of the sale process is to sell the business as a going concern, but said he was pleased by the level of interest in the sale process to date.
Graeme Hart and his son Harrison own food manufacturing company Walter & Wild.
Tough trading conditions
Stewart said the business’ operations were markedly hit by the Covid-19 pandemic, which resulted in the retirement of many experienced staff, as well as by rapidly growing material costs, which he said were “impossible to pass on to customers and supermarkets in time”.
He also said there was an inability to gain the efficiencies required to be a successful food manufacturing company.
“These problems have all resulted in a tight cash-flow and suppliers have put unreasonable requirements on the company, including a requirement to prepay for supply of materials, in some cases with anti-competitive reasons, and packaging suppliers putting unworkable credit limits on accounts based on less than a month’s normal purchasing,” Stewart claimed.
He said the tight cash flow conditions had been easing because of the co-operation of “good customers”, and he had hoped Walter & Wild wished to continue to be supplied with their product from the Masterton factory.
However, Stewart said, this was not the case, with Walter & Wild’s first preference for its loan to be repaid.
“Not many companies can come out of a receivership situation, particularly with the high costs incurred in the receivership, and it is most likely that valuable assets – including land and buildings and plant and equipment and brand value – will be sacrificed for a quick sale.”
Stewart said that pursuing any legal action regarding the business would be difficult “against such a strong party”.
He said that while legal letters have been sent, Walter & Wild claimed Hansells Masterton did not meet the agreement, costing them sales.
“We don’t have the funds to fight Graeme Hart’s empire.”
Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.
