Pro-Pac Packaging is working to stay afloat with financial support approved by the court, aiming to stabilise day-to-day operations while revealing the depth of the company's financial crisis. A $22.6 million rescue package is now helping to secure over 500 jobs, at least temporarily, as more than $26 million in debts to suppliers and staff continues to grow.
Established in 1987, Pro-Pac supplies packaging solutions for the food, industrial and medical industries. Based in Melbourne and listed on the ASX, the company entered voluntary administration in late October 2023 due to prolonged financial pressure. Two administrators were appointed to oversee restructuring plans across 23 subsidiaries in Australia and two in New Zealand.
Initial documents from the creditors' meeting show significant debts, including over $1.1 million owed to a major food manufacturer, $3.7 million to a materials distributor and $1.9 million to a property fund. Dozens of employees are also owed entitlements, with some claims reaching up to $274,000. The company also has a debt of more than $15.5 million to its main shareholder. The court-approved funding from Scottish Pacific will help cover wages and operational expenses as the company continues to explore options such as restructuring or selling parts of the business.
This funding solution is short-term and may not resolve the company’s underlying challenges. Revenue has dropped more than 10% to $142.9 million, while a $13.6 million loss in sales from a Middle Eastern client has worsened the situation. Pro-Pac is facing a contracting market, foreign exchange pressures and declining investor confidence. Its shares have dropped by half over the past year and are now trading at just two cents.
A second creditors' meeting is now scheduled for May next year. The outcome for Pro-Pac remains uncertain, but the delay offers administrators more time to search for a possible path forward as the company navigates one of the most visible collapses in the packaging industry in recent years.
