Rakon has advised employees of its UK subsidiary Rakon UK Limited, of its intent to enter consultation for a proposed closure of its British plant.
This follows a review by the Rakon Board of Directors determining that duplicate overhead structures and manufacturing capability exists between the Lincoln and New Zealand operations.
Revealed by CFO Simon Bosley to shareholders, the proposal is for a full closure of the plant, with the manufacturing of products to be shifted to Rakon’s New Zealand plant.
“Rakon will continue to maintain a research & development centre in the UK, based at Harlow,” Bosley told investors.
“There is no fixed timeline associated with the consultation or proposed closure.”
Should the proposal to restructure be confirmed in the current financial year, there is expected to be further restructure provisions reported that would result in a change to previous earnings guidance for FY2014.
EBITDA would then trade in the range of -$8m to -$5m (previous guidance -$3m to $0), with a Net Loss After Tax in the range of -$59m to -$55m (previous guidance -$54m).
Bosley added that the proposal does not impact on Rakon’s target to reduce bank borrowings to below $12m by March 31 this year.