Hansells Food breaches ANZ Bank covenant after customer trademark stoush
Hansells Food Group breached a lending covenant with ANZ Bank New Zealand because of a loss of earnings at its Australian subsidiary stemming from a customer's trademark dispute with another company.
The Hansells unit had been making products for the customer under a brand which became the subject of a dispute and subsequently had "significant lost sales," according to its 2013 financial statements. The breach was the only black spot in a year when sales climbed 9 percent and the Auckland-based food manufacturer returned to profit.
Chief executive John McKay declined to give details of the trademark dispute, saying it was private to a customer.
"We've been impacted because we made for the customer under that brand," he said. "We're through that issue now and out the other side. It's back to business as usual." The company is supplying some replacement products to the customer under another brand.
Hansells "is working with the bank at the moment," McKay said. "We have their ongoing support."
The company refinanced its debt in the latest financial year, shifting to ANZ Bank from Westpac Banking Corp. Its facilities include a $25.9 million short-term loan at 4.6 percent and a term loan of $18 million at 6.1 percent. It also issued about $3.7 million of convertible notes paying 12 percent interest.
A year earlier it had been paying 7.3 percent on a short-term loan of about $10.2 million at Westpac and 6.6 percent for a $31 million term loan.
Hansells, a closely held company with 26 shareholdings recorded on the Companies Office website, has brands including Empire spices, King soups, Hansells cooking ingredients, Sucaryl and Sugromax sweeteners, thriftee drink concentrate, WeightWatchers foods, Alfa One rice bran oil, make a shake milkshake mix, Pane Toscano Italian breads, Vita Quench, Vitafresh and Vitasport drinks.
In the latest year, net sales rose to $158.9 million from $145.8 million in 2012. Purchases of goods and materials rose 3.5 percent to $86.6 million while manufacturing costs fell 3.3 percent to $23 million. Net profit was about $4 million from a year-earlier loss of $9.1 million.
McKay said sales growth had come predominantly from Australia.