Authentic Food Group firm employing 169 in Dundalk is to close

A Dundalk company which employs 169 people is to close.

The UK-based Authentic Food Group Ltd was granted permission by the High Court today to appoint joint provisional liquidators to Dundalk-based TAFC Manufacturing Ireland Ltd.

Ms Justice Caroline Costello was told the liquidators had not sought any power to continue trading and the order sought was to ensure an orderly wind down.

"Unfortunately, there does not appear to be any alternative", Rossa Fanning SC, for the company, told the judge.

The company produces frozen ready meals and since it was set up in 2014 has had just one profit making year in 2016/17 when it made €400,000.

Projected losses for year end 2019 are €2.6m and the parent company is no longer prepared to support it, the company's petition to the court states.

Shortly after incorporation in 2014, TAFC acquired the business and assets of the Kraft Heinz facility in Dundalk.

This happened because other companies within the group, in the UK and Germany, had reached capacity and there was a need to increase production and outsource to another facility. Dundalk fulfilled overflow orders placed with the UK company.

As of this month (Oct 2018), the company owes €3.2m to its UK sister and €4.6m to the parent.

Among the difficulties it faced were those associated with a new project with the retailer Iceland in 2015 which highlighted the inflexibility and limitations of the Dundalk facility.

This required a €1.8m investment to enhance Dundalk. By 2017 there was also a €500,000 increase in the cost of raw materials along with further difficulties as a result of the Sterling/Euro exchange rate fluctuation. Overall there was an increase of €4.5m in costs, the petition states.

In 2017, a project to develop a new premium range of frozen ready meals for a key customer ran into technical difficulties leading to further unbudgeted costs, including extra shifts for employees to achieve targeted output.

Despite efforts to rectify the situation, very serious issues remained with the existing facility and the only option was to buy new bespoke equipment costing around €1m.

Then last February, the UK sister company was told a co-packing agreement with Kraft Heiz was to be terminated in February 2019. This placed increased reliance on the need for the parent to continue funding the loss making operations.

In addition to all this, the TAFC owed nearly half a million in water rates and despite regular payments to help pay off those arrears, on October 15 last, it was threatened with water disconnection. It also owed €500,000 in gas and electricity charges and was also threatened with the cutting off of those supplies.

On October 19, the parent told TAFC it could no longer continue to fund its ongoing losses and the board decided to seek a wind up.

Ms Justice Costello appointed Ken Fennell and James Anderson of Deloitte as joint provisional liquidators. The case comes back on November 12.

Contempt

Responding to the news local Senator and Labour Employment Affairs spokesperson Ged Nash suggested the news was a serious blow to the workers at the plant and to their families.

"The company is required to notify the Minister for Business, Enterprise and Innovation of their intention to seek collective redundancies and is obliged under the law to engage with Unite Trade Union under the terms of the relevant legislation.

“I will be keeping a close eye on this situation in the coming weeks to ensure that the company’s engagement with the staff and the union is meaningful and fruitful.”

“I have discussed this issue with Unite and I am available to assist the workers and the union in every way I can I this regard.”

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