Circatex faces threat of paying back £3.75m DTI grant

The Tyneside-based firm went into administration last month and has been put up for sale as a “going concern” by the administrators, Tenon Recovery.

“The DTI is a secured creditor of Circatex in respect of the RSA paid, and the administrators will deal with our claim accordingly, if we make one,” said a DTI spokesman. “But no decision has been made on that yet.”

The spokesman said the immediate priority was to “provide help to the South Tyneside area and those affected by Circatex and its failure.”

The £3.75m was given in December 2001 to enable the management buy-out of the company, which safeguarded 800 jobs at the time.
A row erupted over the grant late last year when a group of UK PCB companies complained the grant had contributed to Circatex operating from an “artificially low cost base”, which put other companies at a disadvantage. But the Government denied their request for the money to be repaid at the time.

The administrators have already cut 350 jobs, leaving just 180 staff. The company’s plight was blamed on a cash flow crisis resulting from a falling order book.

History of Circatex

Circatex was born in December 2001 as the result of a management buy-out of the Viasystems PCB factory in South Shields, originally set up by Plessey in the 1970s. Having originally concentrated on PCBs for the telecoms market, Circatex diversified to also cover the automotive, industrial test and measurement, computing, consumer electronics, and medical sectors.

Around 800 jobs were safeguarded by the buy-out, but the company was forced to cut nearly 100 jobs in May 2002 after a fall in the telecoms market. Last year further jobs were lost after workers agreed to a pay cut and job losses in order to keep the plant open.