Norbain was insisting it was business as usual last month, after it went into and out of administration again, and was acquired by distributor Newbury Inverstments. Mark Rowe writes. While the retiring former group chief executive Alun John, due to leave the company entirely at the end of the year, did not transfer over to Newbury, Norbain’s 250 UK staff including MD Barry Shakespeare have.
Speaking to Professional Security last month, he admitted it had been a ‘testing last couple of weeks’ since the pre-pack. When Professional Security put it to him that administration inevitably meant a loss of trust with customers, and what was Norbain going to do to re-establish that trust, Barry Shakespeare replied that he was not sure that customers should have any concern at all: “The issue is not whether we were in administration, or not; it can purely and simply be if we can supply the kit they always wanted to buy.”While he said that one or two customers have had to buy equipment from somewhere else, he added that the company had been very careful to carry on offering what it held exclusively, or quasi-exclusively. “For customers the word ‘administration’ only becomes a real issue if you never come out of administration. The two hours the company was in administration – ‘nano-seconds in reality’ – should make no difference, he added. Norbain was committed to making sure customers did not suffer. He admitted that some customers would be disappointed, ‘but because you can never have 100 per cent on the shelf of what people want’.
The ‘new’ Norbain part of Newbury Investments did not have a bank account for three days, as Newbury had meanwhile to prove itself under anti-money laundering rules, which meant days of difficulty for Norbain taking money without having a bank account. Speaking on July 13, after the ‘pre-pack’ administration happened on June 30, Barry Shakespeare said: ”We have made a ton of progress, probably more than anybody would have reasonably expected; but there is a long way ahead.” He concluded: ”The fact is the business never went bust, and if only people had looked at the reporting accounts, they would have seen the fundamentals.”
Speaking earlier, he stressed the difference between Norbain Group and Norbain SD, the British distributor; he said that the pre-administration Norbain SD part of the group had always been ‘profitable and cash-flow positive’. The major creditors had been the banks – a debt of £48m – who, he noted, always rank first in creditor terms. The problem, Barry Shakespeare suggested, lay at group level: “The banks decided, frankly, that they wanted their money back.” The group’s board had to appoint someone to, effectively, try to sell the group. That was the audit firm KPMG, which went to the market, ‘and there was a considerable amount of interest’, Barry said. More than 20 companies showed interest; five offers were received, and then came the second round, of due diligence. There was only one offer which was worth considerably more to the lending banks; for the UK part of Norbain only. He stressed that the distribution company remained a going concern; the reason it went into administration was that the offer (from Newbury) meant unravelling the inter-group relationships in Norbain; ‘and the only way to do that is to put it into administration; so the administrators could dispose of assets in a pre-pack’. The time between ‘instruction and completing’ – on June 30 – was less than six hours, Barry Shakespeare recalled. The news was announced to Norbain’s northern warehouse at Heywood and offices near Reading at 9.15am on the Monday, July 2.
The new Norbain is privately owned: “We do not have bank debt … there is no debt in the business at all; it is ultimately owned by a family.” He described the owners as a ‘buy to trade business’, ‘certainly not a buy to sell’. “Although they are a very diverse business, every one of them is a distributor; distribution is what our new owners understand incredibly well; they understand the brand, the longevity of the business, what we have done, and the changes we were implementing on the level of debt that the banks had with the company.”
If manufacturer suppliers of Norbain are owed, they have become a trade creditor and have to look to the administrator for any money back; while Newbury acquired the customer debtor book – the outstanding bills owed to the distributor, by installers – and the name of the company. Professional Security MD Roy Cooper asked about the new Norbain’s strategy; was it making some offers and deals with some manufacturers and not others. Barry Shakespeare replied that such details were private and confidential:”The only answer I can give you is that Norbain never had reason to give details of commercial terms to our suppliers.”Some companies have gone public that they have committed to the new Norbain, such as Paxton Access. The two or three days (after the pre-pack) were actually days of record sales, he added: “The simple fact is, the business has not significantly changed its ability to trade. Keith [Purvis] still has kit on the floor, we are still taking orders, shipping things, and sending out invoices … we have made it perfectly clear to all our customers that it is business as usual, we honour the same terms as old Norbain.”
The new Norbain’s aim, he went on, at the start was to bring all of the hundreds of vendors across to the new company, ‘and that still is our intention’, but starting with the most important. Adopting a phrase of George Orwell’s from the fable Animal Farm, Barry Shakespeare said that ‘all vendors are important, but some are more important than others’. Dedicated Micros on July 3 told its installer customers who had bought from Norbain, that DM regarded all contractual warranties given by DM to Norbain to have ceased. DM asked such customers to contact it rather than Norbain for advice about warranty. On that issue Barry Shakespeare said: “It’s every manufacturer’s decision whether they want us to continue doing that [acting as a first point of contact]. DM have taken the view that no, they want customers to talk to them direct. There’s no money in warranty [for the distributor] … DM are the only ones that have taken that view … personally, I don’t understand it.” As for Norbain’s own brand Vista and Xeno products (the distributor having decided early this year to take the SupaVu range back into Xeno), Barry said that warranties were still current and valid.
