Once great Aussie manufacturer Hills placed in administration

A $5.48m court loss has forced once-great Australian manufacturer Hills, which previously made the iconic Hills Hoist, into administration.

The legendary Hills Hoist clothes line.

Hills has been placed in administration a week after revealing it had lost a court case with a $5.48m payout attached which had put the company in a perilous financial situation.

Late on Friday the company was placed in administration by its secured creditor, after on Monday placing its shares in a trading halt while it assessed its options.

The company’s shares last traded at just 2.3c apiece, valuing the entire outfit, now based in Lidcombe, NSW, at a meagre $12.3m.

Hills, founded by Lance Hill in 1945, began life as the manufacturer of the Hills Hoist and grew into a manufacturing powerhouse, with revenues of more than $1bn in the late 2000s.

The company attempted a number of restructures from that time in a bid to transform from a manufacturer of home and hardware and steel products into a technology supplier, however largely failed in that endeavour.

The Hills Hoist is still manufactured by Ames Australasia and is not affected by the issues affecting the listed Hills entity, with the businesses not related in any way.

The court case which brought the company undone was related to the provision of patient entertainment systems to the Western Sydney Local Health District.

After a falling-out between the two supplier companies over contractual matters, the plaintiff, Stellar Vision Operations, sued Hills.

The matter was originally dismissed early in 2022 however Stellar appealed that decision and won a $5.48m payout, with that verdict handed down on May 18.

Hills had on Monday requested that its shares be suspended from trade while it negotiated next steps with Stellar.

The company said it was “seeking a voluntary suspension pending resolution and an announcement by the company in relation to ongoing settlement negotiations between the parties and other stakeholders, including the financier, which, if not satisfactorily resolved, have the potential to have a significant impact on the company’s financial condition’’.

Hills had expected the suspension to remain in place until June 5.

Also on Monday non-executive directors Harley Whitcombe and Gunalan Jeganathan resigned from the company’s board.

Both of those directors were appointed to the board in early May as representatives of Historical Holdings, which is a substantial shareholder in the company after investing $900,000 recently at 3c per share.

Hills had a cash balance of $2.8m at the end of the March quarter, however also completed an entitlement offer on April 20, raising $6.4m. Its net cash outflow for the March quarter was $211,000 and last year it made a net loss of $23.9m.

Hills chief executive David Clarke said the company was deeply disappointed with the outcome and acknowledged the uncertainty and distress the decision to appoint administrators would create for shareholders, employees, customers and other stakeholders.

“This is not an outcome we ever envisaged, particularly following our successful capital raising in April, which brought on board a new cornerstone investor and, we believed, set up Hills for long-term success,” Mr Clarke said.

“To have the company enter administration as a result of a historic legal action over a transaction that long predates the current management and board, and has never had any bearing on the operations of the business, is incredibly disappointing.

“Our consistent legal advice was that this legal claim would ultimately be resolved in Hills’ favour, which made the Court of Appeal ruling so unexpected.

“The board and management have worked tirelessly through the standstill period in an attempt to negotiate a commercial outcome with Stellar Vision that would protect the interests of all Hills shareholders, employees and other stakeholders. However, we have been unable to reach agreement that satisfied the requirements of all stakeholders.

“Hills will continue trading under the control of the administrators through this period. These are good businesses with committed teams, leading products and loyal customers. We remain hopeful that they will emerge from the process stronger and positioned to succeed in the future.”

Further updates will be provided by the administrators.