Listed manufacturer collapse into administration

Rubber surface manufacturer Reclaim Industries has been placed in the hands of administrators just seven weeks after the company told shareholders it had secured cornerstone investors who could recapitalise the company.

Reclaim, which is listed on the Australian Securities Exchange, specialised in tyre recycling and the manufacturer of rubber surface products for playgrounds, the aged-care sector and sporting facilities. The company had offices around Australia and tyre processing plants in Adelaide, Sydney and Perth.

The business has been struggling with losses for the last year and while revenue grew 19% to $15.5 million in 2009-10, a slowdown in the property sector and increased costs related to the set up of new processing facilities in Adelaide and Sydney further added to the company’s struggles.

The company posted a loss of $1.2 million in 2009-10, although this was an improvement on the previous year’s $2.2 million loss.

Reclaim was placed in the hands of David Ross, Richard Albarran and Blair Pleash of accounting firm Hall Chadwick on February 17.

But exactly what caused the company to call in administrators is unclear.

Indeed, on Christmas Eve 2010 the company trumpeted the fact it has secured a $2.5 million “cornerstone investment” from three Chinese investors – Wang Jiandong, a property developer, Zheng Yafang, a clothing manufacturer and Li Xipeng, a company director.

Reclaim managing director John Crosby announced at the same time that the company had secured a $10 million line of credit from Hong Kong-based AGS Capital Group.

ASX documents indicate the shares which the Chinese investors acquired were issued on December 31, although the company’s cashflow statement says the company had just $99,000 in cash at the end of 2010.

John Crosby was contacted for comment but was not available prior to publication.

The administrators will hold the first meeting of creditors on March 1.