Plan to reinvent abattoirs
A PLAN to reinvent Killarney Abattoir as a co-operative has been labelled everything from an “unrealistic, Cinderella solution” to the “only hope” for those owed $7 million after the collapse of Leitch Pastoral Group’s meat entities.
Despite the initial controversy surrounding the plan it is expected to be offered as the primary creditor-backed option at a meeting with the group’s administrators in Brisbane this morning.
Former Leitch Pastoral Group operations manager Rob Doro developed the co-operative proposal which would see financiers, Rural Bank, the major shareholders.
Under his plan, those owed money by the group would be able to translate their debt into shares, but the plan hinges on Rural Bank and director Dudley Leitch surrendering their asset recovery options to roll the abattoirs over into a co-operative agreement.
Yesterday the plan received a mixed response from creditors, yet many were resigned to the fact it may be the only option if Grant Thornton director Michael McCann confirms their worst fears this morning.
Mr McCann is expected to paint a bleak picture for the 220 creditors, who are owed more than $7 million following the failure of the Leitch Pastoral Group owned meat entities Killarney Abattoir, Pittsworth Food Processors and Condamine River Meats.
Mr Doro, who resigned from his position with Leitch Pastoral to float the co-operative concept, said it was the “only hope” creditors had of recovering their money.
He also said he had financial data which proved the abattoirs could be viable under a tightly controlled management regime.
“There is no doubt in my mind that the abattoirs could be profitable,” Mr Doro said.
“I also believe this is the only chance creditors have of recovering any debt owed to them. The fact is they are not going to see a single cent from the administrators.”
Meandarra cattleman Todd Devenish, who may well prove to be one of the largest single creditors, described the proposal as the only positive during the worst week of his life.
His family-owned business Coomrith Cattle Company are owed close to $170,000.
He admitted the co-operative option had merit, but said his previous experience with similar operations made him cautious.
“I would need to know more first, but it may be a real option.”
Meanwhile Mr Devenish said he would like to see the State Government take action to ensure corporations like Leitch Pastoral Group were not allowed to protect assets behind trading companies.
Others in the wholesale meat industry like Duncan Bryce from the Freestone Group said the co-operative concept had merit if close attention was paid to developing a sensible business model, which was “critical, as is ensuring sustainable volumes and pricing”.
But another creditor, who withheld his name, said the co-operative plan was an “unrealistic, Cinderella” solution to a complex and devastating financial failure.
“It is unrealistic to believe a bank will forgo assets in the interests of a few trade creditors,” he said. “The way Leitch set up his company structure he was always going to protect his assets.
“I doubt the meatworks are actually viable, if that were the case wouldn’t Grant Thornton have recommended an attempt be made to trade their way out of this mess?”
Yesterday afternoon Dudley Leitch cautiously lent his support for the co-operative proposal.
“With the blessing of Rural Bank the plan to reopen as a co-operative could work,” Mr Leitch said.
“From a business perspective ownership is important and with the right management the concept could work.”
He refused to be drawn on the viability of the abattoirs under different ownership.
The Warwick Daily News will report direct from the creditors meeting in Brisbane today.