Management buy-out of Contech Operating UK
Management purchased Contech Operating UK Limited, a £12m turnover manufacturer of high precision aluminium castings from its US parent. The team was led by industry veteran Peter Radcliffe, who has run the business since it was founded by its American owners in 2001, together with Keith Brown, Carl Kiteley and Mark Simpson. Contech produces a range of products including steering rack housings, power take off housings and knuckles. Its products are used in a host of major European car marques including Jaguar Land Rover, Ford, Mercedes Benz, Fiat and Renault. Contech employs more than 90 people at its purpose built facility in Welshpool and is widely regarded as one of the best foundries in Europe.
Commenting on the acquisition, Managing Director Peter Radcliffe said: “Our parent Contech LLC went into Chapter 11 last year, which created a lot of uncertainty for us in the UK. All the management and staff continued to work extremely hard through these difficult times, ensuring the business did not suffer while we pulled the deal together. We are now delighted to be an independent entity and look forward to building on our world class facilities and strong customer relationships.”
Mike Yiannis, of Odyssey Corporate Finance, originated the transaction, working with management for over seven months in completing the management buy-out.
He said: “It was ironic that we completed on the day GM went into Chapter 11 in the USA. This was a very difficult deal due to the torrid market conditions and lack of funding available for any business, let alone one in the automotive sector. Contech has an exceptional management team, is profitable and cash generative with a strong balance sheet and healthy order book. Despite all these positives, just about every bank and VC we approached turned it down due to the high profile problems of the sector. In the end we partnered with a private investor who could see the opportunity beyond the headlines and we are all delighted with the outcome.”
Mike Yiannis added: “This is particularly pleasing as it is Odyssey’s first deal since setting up at the start of the year and is one of several we hope to complete in the next few months.”
Harvey Ingram corporate lawyers Rick Smyth and Heidi Hendon, advised the purchaser on what was a highly complex legal transaction.
Rick Smyth said: “The deal was far from straight forward. Management had to deal not only with competing bidders, but also with the issues arising from the Chapter 11 insolvency process in the US. In addition to having to create and implement an innovative funding structure with a club of US banks, who were themselves under severe pressure and public scrutiny, management had to fight off a series of challenges from aggressive unsecured creditors and a hostile pension fund – all done under the spotlight of the US Supreme Courts.”
He added: “It was a fascinating transaction, which had to be handled very delicately in the blaze of publicity in the US at this difficult time for the industry. It clearly demonstrates our international capabilities.”
Harvey Ingram LLP is a leading Midlands law firm, with offices in Leicester, Birmingham and Milton Keynes. Our reputation is reflected by our client base, which includes many leading organisations and individuals in the Midlands, the UK and internationally. We combine a longstanding reputation for quality and integrity with an innovative and practical approach, backed by investment in the latest technology. We have built our reputation by developing long term and mutually beneficial relationships with our clients. We provide a comprehensive range of services to companies and private individuals alike and we are recommended in the Legal 500 for our expertise in sixteen distinct areas of legal service. Our quality of service is underpinned by our ISO 9001 accreditation. We offer a partner led service, supported by enthusiastic and specialist teams of lawyers. We recognise that our success, and the contribution we make to our clients’ success, depends on attracting the best people and nurturing their talent, and we recognise and value diversity. We are proud to have been awarded the Investors in People and Positive about Disabled People accreditations. One of our core objectives is to contribute positively to the community in which we live and work and we are actively involved in a number of community based projects and initiatives throughout the Midlands. We pledge to work with you to find the solutions to your legal requirements and to provide a service which is competitively priced. Article Source:http://www.articlesbase.com/management-articles/management-buyout-of-contech-operating-uk-1021743.html
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