Yarrows Group debt exceeds $150 million

Receivers for Yarrows the Bakers say the business has attracted considerable interest from potential buyers as their first report highlights significant debt across the wider group.

Yarrows the Bakers and two associated companies went into receivership in May when the company’s directors could not reach agreement on a restructure proposal that involved selling its Australian business.

Receivers Andrew Bethell and Brian Mayo-Smith have continued to trade the business as a going concern and have been working with various parties on a potential sale.

In his first report Mr Bethell said the receivers had identified and held discussions with a number of parties interested in a purchase of either the New Zealand or Australian businesses or both.

“There has been considerable interest in the sale of the businesses and we continue to liaise with the interested parties," Mr Bethell said.

At the time of receivership Yarrows The Bakers had total liabilities of $72.8 million, including $55.2 million owed to Westpac.

The report also noted that related companies Yarrows Traditional Foods and Southern Cross Investments owed a further $77.5 million through inter company advances.

With a further $13.8 million of accounts payable total debt across the group stood at $150.3 million.

NBR has reported that a charitable trust set up by the late Noel Yarrow is owed a significant sum from the Yarrows group.

Meanwhile, an Inland Revenue claim of $115,000 is likely to increase, Mr Bethell wrote.

It was too early to say whether there would be any funds available from the receivership for unsecured creditors owed $8.1 million.

Total assets across the three companies totaled $172.3 million.

Mr Bethell declined to give an estimate of likely recovery values because that could materially prejudice the sale process.

NBR understands Japan's Sumitomo group is one party interested in acquiring the assets.

The Taranaki Daily News has reported that Paul Yarrow’s brother John was also among those interested buyers.

The pair squared off in court in 2009 when Paul claimed he paid his brother too much for his share of the business – a $45 million payment in 2005. The case was settled out of court, with details suppressed.

Curiosity over the downfall of Yarrows has been heightened by court action taken by owner Paul Yarrow against a fellow director Michael Finnigan.

Yarrows (The Bakers) was established in Manaia, South Taranaki in 1923. 

The business is sought after for its innovative solutions for bread baking.

In 1996 it landed a breakthrough contract to supply the Subway sandwich chain throughout Australasia, breaking the traditional North American supply chain.