Edinburgh-based Capital Cooling has been rescued from insolvency thanks to a pre-pack administration deal brokered by auditor KPMG.
Founded in 1996, Capital Cooling designs, manufactures, sells, delivers and installs refrigeration equipment, including the Foster, True Refrigeration, Scotsman, Hoshizaki, ISA, Pastorkalt and Pastorfrigor brands.
The administration was announced on 22 December on the firm’s website. This stated: “Following a strategic review of the business, the directors of Capital Cooling have commenced a restructuring. This is being supported by a new, external partner.”
The new backer is understood to be private investor Rcapital. It is understood to have bought the business for around £300,000.
The statement continued: “Capital Cooling’s core business is a strong, profitable and well-run business, with a long history of providing the commercial refrigeration to its customers and a well-respected brand in the UK. However, the service division has suffered due to difficult trading conditions and strong competition in the market.
“The medium-term outlook is that these specific service division-related difficulties will continue, and hence these services will be wound down. The restructuring will make Capital Cooling a stronger and more focused business for the future, which is able to invest in its core businesses.”
According to refrigeration industry news outlet, Cooling Post, the service division closure has resulted in 61 redundancies.
Capital Cooling further detailed: “This restructuring will take the form of a pre-pack administration. Under its terms, certain Capital Cooling’ liabilities will transfer to KPMG LLP, the administrator.
“The corporate restructuring will allow Capital Cooling to continue to operate as normal and build a strong and flourishing business for the future. It will secure jobs, preserve the company’s brand, provide the business with a far stronger balance sheet and protect the interests of its employees going forward.”
The new company is called Capital Cooling Refrigeration Ltd, with Capital Cooling’s former MD, James Anderson, stepping up to the CEO role in the latest business.
Former Capital Cooling product development director Graham Frew is also on the new board.
A statement on investor Rcapital’s website says: “Rcapital’s investment has enabled James Anderson to progress plans to further develop the business and take advantage of significant growth opportunities.”
While Anderson himself added: “We are extremely pleased to have successfully completed a significant financial investment in our business which will allow us to pursue our ambitious growth strategy over the next 1-2 years. I am looking forward to working with Rcapital to create further value in the business.”
In addition to its Broxburn, Edinburgh headquarters, Capital Cooling operates from locations in Warrington and Northampton. The firm’s most recent publicly-available annual report from Companies House reveals that in the 12 months to 31 December 2015 it turned over £16.8m, down from £18.6m the previous year. Gross profit was also slightly reduced, from £4.9m to £4.6m.