Aartee Bright Bar flags risk over going concern status

There is uncertainty over the ability of Aartee Bright Bar, formerly Acenta Steel, to continue as a going concern, it said in its latest results filed to Companies House.

Aartee Bright Bar produces and sells engineering bars through its distribution unit.

The company had its funding withdrawn by Royal Bank of Scotland (RBS) last year, and replaced it this May with a new uncommitted receivables purchase agreement with lender FGI Worldwide.

RBS provided a property loan to Aartee, as well as an asset-based lending facility. FGI provides up to £10mn of funding against a "proportion of eligible receivables" secured over its net assets, Aartee Bright Bar said in its annual filing. The company said there was material uncertainty over its ability to continue as a going concern, as its new funding is "uncommitted and subject to financial and non-financial conditions that require the company to update the lender on a continuous basis, and include obtaining an unsecured guarantee from the ultimate parent undertaking".

Aartee Bright Bar revealed that it had a £1.5mn loan from Aartee Commodities, which is also part of Aartee Group. Aartee Commodities has a charge against it from financial services company Greensill Capital, according to Companies House filings — Greensill fell into administration in March. The Bright Bar business said the loan will likely be extended or converted to equity, but "this may require third party approval", likely from Grant Thornton, the administrator for Greensill. Repayment of the loan, due by 31 December, has not been built into the company's forecasts.

Credit insurers have pulled their cover on Aartee Bright Bar, and as a result some suppliers have requested proforma payment, although not all, according to market sources. One supplier to the distribution business said it has not sold to it since early April, and that it was a regular buyer every month before this.

Some suggest the cover was pulled because of the close relationship between Aartee and Liberty Steel. Aartee's results filing said one of its "largest suppliers" has operated at low capacity rates with periods where their furnaces have been totally idled. Liberty's speciality business has had to idle furnaces recently after its scrap suppliers moved to proforma payment after the collapse of its main lender Greensill.

Liberty and Aartee announced last December that they would combine their engineering bar divisions, but in its results, Aartee said the deal was terminated as the "seller was unable to comply with certain terms of the agreement".

By Colin Richardson