Pre-pack deal saves 84 jobs at Leicestershire engineering firm

84 jobs at a North-West Leicestershire engineering business have been saved by PKF Cooper Parry’s Restructuring team.

Midland Metal Products, a steel fabrication business based at the Merry Lees Industrial estate in Desford, went into administration on 8 November.

The business and assets of the firm were sold to Midland Metal Fabrications, helping to secure the futures of the 84 people it employed.

The company’s difficulties started earlier this year when a combination of falling orders and difficulties in recruiting the right skills to meet customer demands resulted in significant losses being incurred. Despite managements attempts to stem its losses, the company entered a Company Voluntary Arrangement (CVA) on 19 July 2016, with a view to repaying a substantial portion of its liabilities out of profits anticipated to be generated over the next five years.

Shortly after the securing of the CVA, one of the company’s key customers, instrumental to the success of the CVA, announced it was to source its requirements elsewhere. The loss potentially spelt the death knell for the business and the management concluded they had little alternative but to try to realise its business via a trade sale.

On 8 August 2016, PKF Cooper Parry’s restructuring team, led by Tyrone Courtman, was engaged to conduct an ‘accelerated merger and acquisition’ marketing exercise, which resulted in some trade interest being shown in the business. However, as negotiations progressed it became clear that the extent of the company’s liabilities would frustrate any share sale, and that the only way to maximise recoveries for creditors, would be to arrange a pre-pack administration sale to a third party.

After some particularly protracted negotiations, which resulted in the leading buyer withdrawing its interest, a sale was concluded immediately after the joint administrators were appointed.

Courtman said: “I am delighted to have concluded the sale and to save the jobs of the company’s 84 strong work force. The situation would have been very bleak had an immediate sale not been effected.

“The company’s future order book was slim. My conversations with the company’s work force without this deal would have likely resulted in me making virtually all of them redundant immediately and resulted in the business closure.

“I wish the buyer and the business’ employees every success for the future. It gives me a great sense of satisfaction to know that I have made a positive impact on the lives of its 84 employees and in preserving their engineering skills here in the Midlands.”

Kayvan Namazi of Midland Metal Fabrications: “I’m delighted to have concluded a purchase of the Midland Metal Products Limited business. There is much work to do, but I see a great future for the business with lots of potential.

“Many of the employees possess engineering skills which are hard to find these days. And they are capable of being applied across many more products and markets which hitherto have not be exploited by the company.

“I am very confident in securing much needed new business for the company and providing it with a secure financial footing, which has been lacking in recent years. We are here to satisfy our customers’ needs and to add value to their business. And that’s precisely what I intend doing here for everyone’s mutual success.”