Rotorua company makes final attempt to stave off liquidation

Mills-Tui Alloy owner John Wilmshurst is making a final attempt to save the troubled vehicle construction firm from liquidation with a new proposal for the company's creditors.

The business owes approximately $2.4 million to nearly 180 creditors throughout New Zealand.

A creditors' meeting held in Hamilton on June 24 failed to resolve the issue, with the 20 creditors or their representatives present rejecting an offer by Mr Wilmshurst to pay them half the amount they are owed over the next five years.

Mr Wilmshurst declined to comment on any aspect of his latest proposal, however papers obtained by Rotorua's Daily Post reveal he has again offered 50c for each $1 owed. This proposal will be voted on by all creditors. The result of the postal vote should be known soon after the July 15 cut off.

The votes are based on the amount of money owed to each creditor -- so if that creditor is owed $1218 they get a block of 1218 votes, which will either be for or against the proposal.

That means the company's fate lies largely in the hands of the creditors owed the most.

Among Mills-Tui's biggest creditors are Feilding-based moulding company Fibreglass Developments, which is owed $327,094, Pakuranga campervan accessory manufacturer Serada (owed $278,921) and Wiri-based truck and trailer component builder Transpecs ($141,401).

It is possible the new offer will find more favour with the creditors than an initial 30 per cent over three years deal Mr Wilmshurst had proposed before the June 24 meeting.

Other elements of the new deal include a clause that the money owed to companies in which Mr Wilmshurst and former Mills-Tui directors Hilton McLaughlan and Peter Bradley hold shares will be written off.

Those companies -- Tuff Plastics Moulders, Hybrow Motorcycles, Lakeland Helicopters and Eddie Pascoe Electrical -- are owed a total of $141,881.

Mr Wilmshurst is personally owed more than $500,000 and former directors Hilton McLaughlan and Peter Bradley are almost $240,000 out of pocket between them.

A former Rotorua success story, Mills-Tui employed about 50 people a year ago. Earlier this year the company laid off staff leaving only 19 employees still working there.

The company's owners had purchased what was a then ailing business in August 2002, merging it with an engineering company and renaming it Mills-Tui Alloy.

The company had been facing severe cashflow problems following the loss of a deal to supply up to 40 fire engines to the New Zealand Fire Service. A contract with another customer was also in dispute.

After a year under new ownership business was booming and the company was looking to diversity and expand into other parts of Rotorua.

Further problems developed and in March the company laid off about 20 staff, blaming the move on a decision by the New Zealand Fire Service to award a major construction contract to two overseas companies instead of Mills-Tui.

That was at odds with the Fire Service which said it was still negotiating with its preferred supplier for the contract to build 15 fire engines and it was not an overseas company.

Meanwhile, Mills-Tui also decided to abandon its Mitsubishi truck servicing centre in Fairy Springs Rd and continue that part of the business at the main Pururu St workshop. That was expected to save the company at least $3000 a month in rentals.

At the time the company asked its creditors not to call in debt collectors, saying Mills-Tui found itself in an extremely difficult financial situation and a major loss on a completed contract meant its cash position had deteriorated even further.

The company called in expert financial assistance to help it out of its financial bind and in a notice to creditors asked if they could refrain from debt collection.

- DAILY POST (ROTORUA)