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Cherrystoñac
Reefer operator Fransen Transport has suffered the same fate as its tvvo sister firms and is now in receivership with credit liabilities "believed to be in excess of £300,000".
Dominic Perry reports.
AImost £130,000 was taken out of a Kidderminster haulage firm by its parent company in little over seven months leaving it effectively insolvent, a CM investigation has revealed.
Now questions are being asked about financial mismanagement at the firm stretching back to the time of its acquisition.
Reefer operator Fransen Transport was placed into administration last month and immediately ceased trading.This was the third company owned by Cherrystone Investments, run by Paul Priestley, to experience a cash crisis this year — sister companies PJ Butler & Sons and PJ Butler Storage went into receivership earlier in the autumn (CM2 and 16 November).
Leveraged buyout
Fransen Transport was acquired by Cherrystone in a highly leveraged buyout in March 2006 — Fransen lent Cherrystone £200,000 of its capital to fund the acquisition. In addition. Fransen's trucks were sold to a finance firm and then leased back to pay off its overdraft.
The massive drain of money left Fransen with just £3,000 in its bank account when it began trading under the new owners, although it also had access to funds from factoring its invoices.
This was exacerbated by repeated withdrawals from Fransen to the parent company or its sister firms, PJ Butler& Sons and European Storage.
According to records of the transactions kept by Fransen's management team. £5,000 was paid out to European Storage each month — a total of £35,000
without a full explanation. Additionally, £51,590 was paid to PJ Butler and another £36.918 to Cherrystone, leaving Fransen with a £123,000 black hole in its accounts and little hope of survival.
Stayed on Henk Buzink was Fransen's MD prior to the Cherrystone acquisition; he stayed on to manage the firm. "I knew it was going to happen," he says. 'There's no way that you can take £300,000 out of a company of this size. You just can't. [Cherrystone] kept on dipping for bills for the other businesses:' Buzink says that the firm was profitable; according to records seen by CMit was making pre-tax profits of around 12% of its turnover, before what Buzink describes as "defunding" is taken into account.
The firm's administrators, SF Plant, have now taken the step of employing a forensic accountant on the case. A statement from joint administrator Simon Plant says: "The company's credit liabilities are believed to be in excess of £300,000. The company was acquired by its current management in March this year. We have instructed our forensic team to investigate the failure of this business; until we receive a detailed report we cannot make any further comment."
Despite the cash crisis at the firm and the fact that its two sister firms were already in
administration, Cherrystone's director Pa Priestley was in negotiations to buy yi another business.
The director of that Essex-based compan who asked not to be named, says: "[Chen.) stone] made an offer for the company provir ed they could come up with the finance. It toe them ages to sort themselves out; I didn't fei comfortable and told them to go away!'
He reveals that during talks Priestley tol him about the administration at PJ Butler bt still wanted to proceed: "He told me that h had to put it into receivership but that wouldn't affect the deal."
Despite repeated attempts. CMwas unabi to contact Paul Priestley. •