BRITAIN’S biggest bed maker Silentnight has been rescued from collapse, safeguarding more than 1,000 jobs – including 350 in Kirklees.
HIG Europe – the European division of global private equity investment firm HIG Capital – has agreed to buy Silentnight’s ongoing business interests, including its brands, after the firm was put into administration.
The Lancashire-based group, which has a base on Soothill Lane in Batley employing the 350 people, faced a £100m black hole in its pension fund and went into administration after it failed to win enough support for a Company Voluntary Agreement.
Yesterday’s move protects the jobs of the group’s 1,250 staff, but it is bad news for pensions safety net the Pension Protection Fund which is now likely to have to take over the pension fund and its £100m deficit.
The final salary pension fund has around 1,500 members, but only 100 still work for the group. If the pension does go into the PPF, members who have not yet retired will see the annual benefits they can receive capped at around £30,000 a year.
Silentnight had proposed a Company Voluntary Agreement (CVA) to address an “unserviceable level of historic debt” and its pension deficit, following the withdrawal of credit facilities by its bank earlier this year.
Creditors had been due to vote on the CVA this week, but despite getting support from suppliers, employees and HM Revenue & Customs, the group failed to win the backing of the Pension Protection Fund, which was its largest creditor, leading to its decision to go into administration.
Neal Mernock, chief executive of Silentnight, said: “While we are disappointed that the CVA was not successful, this deal with HIG Europe safeguards the jobs of our 1,250 employees and enables Silentnight to continue its proud history of manufacturing and distributing beds across the UK and Ireland.
“Silentnight is now in a much stronger financial position with healthy short-term cash flow and the longer-term ability to invest substantially in marketing and product development.”
Mark Kelly, partner of HIG European Capital Partners, said: “Silentnight is a strong, profitable business with a 21% market share and a position as the largest manufacturer in its sector in the UK and Ireland.
“We are delighted to have acquired a business of this standing and heritage and look forward to working with the current management team to further strengthen and develop its position over the coming years.”
Silentnight, known for its hippo in striped pyjamas and duck logo, was founded in 1946 and supplies around half a million beds a year to retailers.
The group employs about 650 staff at its main site in Barnoldswick, east Lancashire, but also has employees in Batley, Cumbria and Ireland.
Most recent results show the company made sales of £107.1m in the year to January 30 2010, down from £110.8m the year before.
Operating profits fell to £3.3m from £3.8m.