800 jobs at risk as Norco merger fails

Society (CWS) rejected a merger bid.

Bank support has been withdrawn as a result and after more than 130

years of trading, Norco has been granted approval at the Court of

Session to call in a provisional liquidator.

The financial difficulties of Norco (The Northern Co-operative

Society) became clear last spring when chief executive Mr Robin Pollock

left following the announcement that the company had a deficit of #7.4m.

This was blamed on a combination of major expansion projects, high

interest rates, and property revaluation. Norco also had #30m of

borrowings.

Last summer Norco's 60-year-old dairy operation was sold as were the

five pharmacies the company operated.

In February this year superstores in Westhill, Banchory, Elgin, and

Ellon were sold to the Argyll Group for more than #15m.

Two months later the Scottish Co-operative Society paid around #15m

for the jewel in the crown, Norco's Berryden superstore which has been

at the heart of the empire since it moved from its original Loch Street

sites.

That left the company with its leased Dundee superstore, understood to

be a substantial loss-maker, an enormous warehouse at the Altens

industrial estate in Aberdeen for which it no longer had any use but had

a 30-year-lease, an electrical and home furnishing store at Berryden

where it also owns considerable land, and 20 convenience stores.

When the superstore was sold it was said that what remained was a

smaller more viable business. However, at the end of May it was revealed

that Norco had made a formal application to merge with the CWS.

Yesterday CWS told the Norco directors it was declining the

application.

''Pending this decision the society has been able to continue its

activites with the support of its bankers,'' a spokesman said. ''It has

not proved possible to obtain future bank support at the level which was

required.

''In these circumstances the Norco board of directors, having taken

professional advice, concluded that it had no alternative but to seek

the appointment of a provisional liquidator.''

It petitioned the Court of Session and the appointment was granted

yesterday.

''The outcome of these recent negotiations is of immense regret to the

board of directors, particularly after the substantial progress that had

been made over past months in reducing the society's debt levels,'' the

spokesman said.

''Share capital, development bonds, and small savings accounts

invested in Norco are covered by the Co-operative Deposit Protection

Scheme (CDPS). This scheme, with support from the CWS, will ensure that

individual investors will, in due course, receive full repayment of

their capital.''

To help their 20,000 shareholders and investors the CDPS has opened a

free telephone helpline on 0800 592424 which will be open during

business hours on weekdays.

Of the 800 employees, 450 are part-time.

Last night SNP Banff and Buchan MP Mr Alex Salmond said it was ''a

tragic conclusion to the financial mess Norco got itself into.

''Just a few months ago they had some of the best retailing outlets in

the North-east and now there's nothing.

''I am extremely disappointed the co-operative society nationally

could not have done more to safeguard the 800 jobs now at risk. They

were full of praise for Norco during its expansion in the late 1980s and

now, with hindsight, proclaim that Norco overstretched themselves.''

Yesterday Lord Cameron of Lochbroom granted the petition presented by

Norco which indicated it had net liabilities of #3,655,386. The petition

asked that Mr Ian Souter, chartered accountant, of Huntly Street,

Aberdeen, and Mr Douglas Beedie, chartered accountant, of Constitution

Street, Dundee, be appointed joint provisional liquidators.

HAWICK Knitwear manufacture Lyle and Scott yesterday announced 70

redundancies in its 434-strong workforce. The firm, part of Courtaulds

Textiles blames increasingly difficult trading conditions.

The phased pay-offs will begin almost immediately, with 55 jobs going

at the Hawick factory, and the remaining 15 at the Kelso branch. Lyle

and Scott chief executive Andrew Thatcher said: ''Trading conditions in

Europe are particularly difficult. It is essential to bring capacity and

costs in line with viable demand.''