Ion Sinks Into Administration

The Age

Wednesday December 8, 2004

CHRISTIAN CATALANO

EMBATTLED vehicle parts maker Ion Ltd called in administrators yesterday after its major lenders cancelled a key $440 million loan facility it secured just three months ago.

The announcement shocked investors, who believed that a trading halt called on Monday by the Melbourne company, which employs almost 3000 people in three countries, was related to the imminent sale of its non-core petrol and LPG distribution business, Ion Energy Services.

The expected sale price for IES was $120-$140 million - a figure that would have wiped much of Ion's $297 million net debt position at June 30 this year.

However, a consortium of five lenders, led by National Australia Bank, which last night warned it had a $135 million exposure to Ion, decided to withdraw the $440 million facility it granted in September as it felt Ion's expansion in Australia and the US was taking too long and proving too costly. Westpac and Commonwealth are in the consortium.

"Without the support of its bankers, Ion will not be able to meet its commitments for the capital expenditure program required to complete its current growth projects," the Melbourne-based group said.

"Therefore the directors have no choice but to appoint an administrator to the company."

Ion has been undergoing an overhaul since the middle of this year, when founder Graeme Salthouse stepped aside for Roger Flynn. Since Mr Flynn arrived, he has been overhauling Ion and pushed through more than $60 million of write-offs. He told the annual meeting in October the company was looking at selling some operations.

Chairman John Pizzey acknowledged Ion's problems at the meeting, telling shareholders the company was likely just to break even in the first half of this financial year and experience a significant decline in earnings for the full year to June 30, 2005.

Ion supplies parts to Ford, Holden and Harley-Davidson. It makes wheels and alloy components, transmission assemblies, cylinder heads, oil pans and other automotive products.

The Australian Workers Union expressed concern about the future of Ion's employees, 750 of whom are at the Albury plant, with 2000 more across Ion's factories in Altona, South Australia, New Zealand and the US.

But the administrators, Colin Nicol and Peter Anderson, of McGrath Nicol & Partners, urged employees not to panic, as they hoped to keep all Ion businesses running during the administration process.

Before trading halted at 93 ? yesterday, Ion shares had slipped 62 per cent this year from their January high of $2.45.

Administrators will meet creditors next Monday.

© 2004 The Age

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