Hartstone stops pay to staff in Spain

HARTSTONE, the troubled hosiery and leather goods company, has ceased paying workers at a key Spanish subsidiary because of a debt standstill agreement recently negotiated with bankers, writes Julia Kaminski.

Workers at Cima SL have not been paid since July and are threatening legal action. Hartstone claims to have sunk nearly pounds 3m into the subsidiary since buying it for pounds 2.2m in November 1990 and says no further money is available.

A Hartstone representative flew to Spain late last week to discuss the situation with management and employees, who have been demonstrating outside the factory in Ubrique near Cadiz.

Miguel Angel Garcia, a senior union official at the plant, which exports handbags, wallets and suitcases to Japan, America and the rest of Europe, said no Hartstone official had yet spoken to employees about the situation, and it was their belief the company wanted to sell the subsidiary.

Sandy Belford, corporate communications manager for Hartstone, said the company was in discussions in Spain, but would not say whether it intended to try to find a buyer.

In the year to 31 March 1993, Hartstone made pre-tax losses of pounds 9.9m after charging exceptional restructuring costs of pounds 18.7m.

Shaun Dowling, who replaced Stephen Barker as chairman in May, blames past management for the losses. Hartstone has expanded rapidly in recent years through a series of 'unwise' acquisitions in Europe and the US.