Resurge helps revive paper company
Turnaround company Resurge has completed its first deal by helping to resurrect Somerset-based Moorgate Paper.
On Christmas Eve, Resurge agreed to provide the Moorgate Paper company with £500,000 worth of financing for its £2.6m acquisition of Clarence Paper Sales Limited, a company which went into receivership last November.
Moorgate obtained the further £2.1m from traditional sources of financing. The money borrowed from Resurge is fully repayable within six months with interest of up to 25%.
The deal is backed by 51% of Moorgate’s share capital and a personal guarantee from Neville Simpson, the owner and only other shareholder of the company.
Under the deal, Moorgate acquired the trade debtors of Clarence Paper, estimated at about £2m, as well as the goodwill, plant, equipment, stock and freehold premises.
Clarence was a wholly-owned subsidiary of Capital Paper Holdings and made pre-tax profits of £1.07m in the financial year to May 31, 2001.