HOLFELD PLASTICS is negotiating with its banks concerning its €16 million debt and hopes to raise €1.25 million from a property sale this year to ease the financial pressures faced by the company.

Accounts for the Wicklow-based group, which manufactures plastic containers for sale in Ireland and Europe, acknowledge that its financial state at the end of last year cast a significant doubt over its ability to continue as a going concern.

The figures show that it lost €922,000 last year, partly as a result of increased costs in raw materials. It owed its banks €16.3 million at the end of 2011 and had net liabilities of €12.6 million.

Most of the company’s debt fell due last year, but its banks agreed to extend its facilities to June 30th next year. The company’s accounts state that talks are continuing with its bankers and that the directors are confident that these will have a successful outcome and result in its repayment date being extended to at least a year after the approval of 2011 accounts, which was in early August.

The company is also in talks to sell five acres of its site in Arklow, Co Wicklow, for €1.25 million. The deal depends on the potential buyer, who is not named, getting planning permission for the property.

The directors acknowledge that the outcome of the planning application is uncertain, but are hopeful a deal can be concluded late this year or in early 2013.

Holfeld spent €9 million on the former Irish Fertiliser Industries site in Arklow in 2006. In 2010 it wrote off €5.5 million of the value of its property assets, which included this premises. The company is also looking at other possible sales of part of the property and is seeking other ways to reduce its costs. Its management accounts indicate that the business returned to profitability in the course of this year.

Holfeld Plastics employs 125. Sales rose last year by 16.4 per cent to €19.9 million from €17.1 million in 2010. Exports to other EU countries accounted for €15 million of its sales.

Costs rose by close to 30 per cent, from €13 million to €16.6 million, denting its gross margins. The directors’ report indicates that this was largely due to an increase in raw material prices during the year. This left it with operating losses of €417,000. Once financing costs of €539,000 were taken into account, it ended the year with a pretax deficit of €956,000. Its overall loss for 2011 was €922,000.

Holfeld has plans to spend €1.5 million on research and development this year.

The company’s biggest shareholder is Edmund Holfeld, who founded and runs the business.