64 jobs are saved as company bought out.

Byline: Peter McCusker

APLASTICS company has been bought out of administration by some of its management with support from private equity backers, saving the jobs of 64 North East workers.

Gateshead-based HFW Plastics went into administration in early August after losing a major contract which exacerbated a deteriorating financial position.

Administrators from KPMG's offices in Newcastle and Leeds were appointed to save the business and have now successfully sold it in a deal believed to be worth over pounds 350,000.

Howard Smith, joint administrator and KPMG associate partner, said: "We are very pleased to have completed a sale of this long established business and hope that the new company will be in a position to maximise the potential of its strengths."

The new company Thermopak will be led by HFW's former managing director, Mike Stewart. The deal has been financed by private equity and members of the management team.

Leeds-based Plus Market-listed, venture capital group NJD Capital has put pounds 21,000 into the venture and in return has received a 6.3% stake of the business.

It has also loaned the company pounds 29,000 at a rate of 8% per annum, repayable over three years.

Mark Firmin and Mr Smith of KPMG's restructuring practice have been marketing the business and negotiating the sale since their appointment as joint administrators on August 5, when 19 staff were made redundant.

The company, based on Albany Road, makes "thermoformed" trays for fresh food which can be found on the shelves of supermarkets including Tesco, Sainsbury's, Morrisons and Asda.

Thermopak was advised by lawyers from Irwin Mitchell's Leeds office Andrew Walker, a partner in Irwin Mitchell's Insolvency team, said: "This is a significant deal which keeps 64 people in jobs which had looked very uncertain a few weeks ago.

"We're delighted to have played a part in securing those positions and helped Thermopak put HFW on a solid footing from which it can build on in the future.

"These kind of deals are becoming more common in the current economic climate and clients are benefiting from the practical solutions we can provide in complex situations."

NJD was recently established for the purpose of acquiring minority investments in small UK companies that require either a capital reconstruction or, are about to undergo a change of ownership, through a management buy-out or management buy-in.

The company says it aims to maximise shareholder value by investing over a five- to seven-year period.