Tuesday, December 09, 2008
UK car parts firm Wagon collapses
The UK arm of leading European car parts business, Wagon Automotive, is to go into administration after talks on a new funding deal with its banks failed.
Wagon Automotive employs 500 workers in the West Midlands and supplies parts to Ford, Honda, General Motors and Nissan.
The firm said it hoped some of its plants in other countries would be able to avoid going into administration.
Birmingham-based Wagon employs over 4,000 workers across Europe, and has struggled due to the car market slump.
Several of its customers have cut back production or temporarily shut plants in order to reduce their own costs.
The corporate restructuring group, Zolfo Cooper, is expected to act as Wagon's UK administrator.
In a statement the company said: "Decisions on the overseas group companies have not been made."
"It is anticipated that some may be able to continue to trade without needing insolvency protection," it said.
The firm has plants in Coventry and Walsall.
Funding problems
Shares in Wagon were suspended in October after it reported a "steep deterioration" in the European car market and said it was in funding talks with its lenders.
The firm - which is controlled by the American billionaire Wilbur Ross - failed to persuade its banks to led it more money.
The banks, led by the Royal Bank of Scotland and including Lloyds TSB, both of which are now largely controlled by the government, declined to contribute 12m euros (£10.3m; $15.2m) to a 50m-euro funding package.
Wagon's carmaking clients had put up 30m euros and Mr Ross was understood to have been prepared to contribute 10m euros through the purchase of one of its subsidiaries.
The funding package would have kept the firm running for another three months. The banks had already agreed loans totalling 155m euros during the summer.
The Chancellor, Alistair Darling, is set to chair the inaugural meeting of the Lending Panel later this week, which was set up in the pre-Budget report to monitor closely banks' lending practices to companies and individuals.
The company traces its roots back to Wagon Repairs, a business set up at the end of World War I to maintain railway rolling stock.
DATED: 09.12.08
FEED: AW
