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March 7, 2011 2:35 am
Modec, maker of pioneering electric delivery vans, has gone into administration with debts of more than £40m.
The main creditor is Federated Investments, the vehicle of Lord Borwick, who founded Modec in 2004. He invested the £14m profit on the sale of the 38 per cent stake held by his family for more than 40 years in Manganese Bronze, maker of the London taxi.
News of the administration emerged the day after Manganese Bronze announced the single largest order for its taxis. The company’s joint venture with Geely Automobile Holdings of China is to supply 1,000 vehicles worth $27m (£16.6m) to Azerbaijan by the end of November.
Lord Borwick, a former chairman of Manganese Bronze, set up an assembly plant in Coventry to build the Modec, which is comparable in size to a Ford Transit or Mercedes Sprinter. Tesco took 15 of the first vans to be built in 2007, but has not placed an order since.
The plan was to increase production to 2,000 vans a year, but so far just 400 have been sold, including 150 in the UK, to customers such as UPS and FedEx.
The report and accounts for 2009 show turnover of £9.3m, a pre-tax loss of £6m and net liabilities of £29m. Grant Thornton, the auditors, said the figures indicated “a material uncertainty which may cast doubt about the company’s ability to continue as a going concern”.
Three partners from Zolfo Cooper, a corporate advisory and restructuring business, were appointed as administrators on Friday, and immediately made 26 of the 53 employees redundant. They described Modec as “a market leader in its field, and as such it represents an attractive purchase for the right buyer”.
Lord Borwick said the company had been hit by the recession, which had left potential customers reluctant to invest in something new. In spite of low interest rates, companies had been unwilling to incur the high capital cost of £55,000 per van. Enthusiasm for green transport was at a lower level than three years ago, even though diesel was becoming expensive.
Nevertheless he believed that electric vehicles with low running costs were “the vehicles of the future. But we are unfortunately operating in the present”.
The difficult economic climate has claimed other victims among companies focused on green transport. In April 2009, Axeon, an Aim-quoted company that supplied Modec with battery packs, was taken private after going into administration. At the beginning of this year, Tanfield, the Aim-quoted powered access specialist, completed the sale of the assets of Smith Electric Vehicles UK to its US associate. The group had set out to become a global leader in zero-emission electric trucks through its ownership of Smith Electric, renowned for producing milk floats in the 1950s.
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