Manufacturer enters administration after losing key contracts from Coles and Wooloworths

Frigrite, a listed company that has supplied commercial refrigeration and air conditioning systems since 1945, has placed its two operating subsidiaries in the hands of administrators.

The company has been battling falling earnings and mounting debts since losing a key contract to maintain fridges at Coles stores in 2008-09.

Just before Christmas, the company told investors it had been hit with a second blow with Woolworths claiming Frigrite had defaulted on a $16.3 million maintenance contract. The supermarket giant then issued Frigrite with a notice terminating its contract. 

Frigrite, which had around $6 million in debt at the end of the 2009-10 financial year, started discussions with its customers and potential investors about a possible recapitalisation of the company, but yesterday handed its two operating businesses to administrators Craig Shepard and John Park of KordaMentha.

The administrators have now suspended the company’s operations while they assess the state of the business.

Shepard and Park also said in statement they will start the process of looking for an investor or buyer who may want to recapitalise or acquire the business.

Park and Shepard blamed the collapse of the two subsidiaries on the loss of the Coles and Woolworths contracts, margin pressure in the company’s installation division, and a drop in output at the company’s manufacturing business.

Frigrite, which employs around 369 people, suffered a 25% drop in revenue in 2009-10 from $173 million to $130 million, although the firm’s net loss narrowed from $2.7 million to just over $1 million.

The company had a market value of $4 million before it suspended itself from trade on the ASX in late 2010.

Creditors meetings for the two operating subsidiaries will be held in the next week. The listed company is expected to remain out of administration while options for its operations are assessed.