Largest Nordic prefabricated single family house maker Finndomo has applied for corporate restructuring due to liquidity concerns. Neo Industrial (HSE: NEO1V) acquired 30% of Finndomo in 2010. Just last year Neo, together with other major shareholder Ilkka Brotherus, had to inject more capital. Finndomo said that perpetually loss-making Swedish operations, which were divested last year, are ultimately to blame for the troubles. The company had been negotiating on a short-term financing arrangement that fell through in the final stretch.
Finndomo is an associated company for Neo Industrial and makes its Single Family Housing business unit. This is the second of the three business arms of Neo Industrial to seek corporate restructuring within a few months, following Avilon of the Viscose Fibre segment down that path. Both of these acquititions were done in 2010. The Cable segment which has been in house longer is faring better although it too just concluded co-determination negotiations.
Judging by the amount of negative releases just this month, Neo Industrial looks like a company in crisis. Just a week ago it warned that 2011 profit will be below earlier guidance. It pushed back Q4 2011 accounts release date today from this Friday to February 28th. Avilon Ltd’s restructuring also has a new deadline date. The stock shed 3.7% today.
The current order backlog of 250 houses is considerably below normal levels. Some bad press of mould problems that few houses were experiencing surfaced couple years ago but company has maintained it has not affected business. Compensation matters on those issues are mostly pending. Neo Industrial says that the objective of the process is to secure continuity of industrial manufacturing of prefabricated single family houses in Finland. Finndomo more directly states that this process will secure just that.
Finndomo has four production facilities in Finland and some 200 employees at the moment, a number that has come down by a mile from its peak. It has had various corporate and private owners during its 70 year history. Production facilities are located all over Finland in Sonkajärvi, Loviisa, Haukipudas and Hartola.
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