West Side mussel business Demlane Ltd has gone into administration alongside its parent company Isle of Shuna plc, in what will come as a major blow to the local seafood industry.
Administrator PricewaterhouseCoopers has been called in by company directors following a drop in turnover, predominantly in wholesale distribution.
The news could scupper plans Demlane had to launch a range of seafood products from its newly extended plant in Walls unless a buyer can quickly be found for the business. Six people are employed at the factory and a further three on the mainland.
The administrators said today it was too soon to tell if staff would lose their jobs, but work at the plant is continuing in the meantime.
Only last month Demlane’s sea service assets, such as workboats and equipment, were taken over by Blueshell Mussels in a deal under which the successful Brae company also took on assets from Si Seafarms. That deal is unaffected by the news, however.
Isle of Shuna was established in 2005 to exploit the growth in the mussel industry. It went on to acquire the factory and equipment originally set up by Demlane.
Joint administrator Graham Frost said: “Isle of Shuna plc has grown successfully over the years and is well regarded by customers. However the majority of its turnover had been through wholesale distribution, and this has not been profitable.
“The business had encountered cash-flow problems in recent months and the management had been working hard on a restructuring programme.
“The mussel production business operated by Demlane had recently been sold to allow it to focus on processing and developing added value retail customer opportunities.
“The board have since reluctantly concluded that without additional working capital and investment this path is no longer feasible on a standalone basis.
“Our immediate focus will be to determine interest from industry players in continuing the strategy to develop production from the newly extended processing factory in Walls.
“We believe this represents an opportunity for an industry player to acquire a business and factory that is strategically important.”
West Side councillor Frank Robertson said Demlane had been a major player in the area’s seafood sector.
“The original sea sites in Walls, and the factory, were set up by Demlane and later bought over by Isle of Shuna,” he said.
“They [Isle of Shuna] have invested a considerable amount of money into smoking and processing mussels at the Kirkidale factory.
“I am disappointed this company is having to go into administration because it has been one of the major employers in the aquaculture industry.”