Surface Transforms concludes £13m loan deal to boost production capacity
A £13.2m loan deal has been clinched by Knowsley-based specialist brakes manufacturer, Surface Transforms.
It will contribute to the company’s forthcoming £44m investment programme to significantly increase production capacity and create around 70 jobs.
Conclusion of the loan follows an £11m fundraising by the company, which comprised a placing, subscription and open offer launched earlier last month.
Surface Transforms, which makes brake systems for high performance cars and aircraft, has signed the £13.2m loan agreement with the Liverpool City Region Urban Development Fund which is part funded by the European Regional Development Fund.
The investment is supporting capital expenditure that will see the production capacity available in the Knowsley site rise from £50m sales capacity per year in 2024 to £150m sales capacity per year in 2027.
The capacity increase is required to support the forecast substantial sales increase underpinned by the company’s current £390m lifetime contract value and £300m prospective contract pipeline.
The £390m figure is based on the directors’ expectations, their understanding of the relevant OEMs (original equipment manufacturer) production plans and estimated demand for discs and it takes into account the expected lifetime revenue.
The remainder of the £44m capital investment programme will be funded from free cash flow as the company moves into profit, still expected during 2024.
The terms of the loan remain unchanged from those outlined during the fundraising. The loan facility is available for drawdown over an initial two-year period and will be progressively deployed exclusively for capital expenditure purposes.
Quarterly capital repayments will commence in the first quarter following the completion of the availability period.
Completion of this loan agreement was a condition precedent to the second phase of the recent equity placing. This condition has now been satisfied. The passing of the necessary resolutions is expected at the forthcoming General Meeting on December 18, 2023.
Chief executive, Kevin Johnson, said: “This capital expenditure loan will enable us to execute our strategic growth plans and further strengthen our position as a leader in carbon fibre reinforced ceramic automotive brake discs.
“We want to thank our partners in the Liverpool City Region Combined Authority and Knowsley District Council for their support in securing this loan.
“We are now looking forward to concluding the recent equity placing and open offer and accelerating our programme of increased capacity installation paving the way for a swift acceleration of our expansion plans.”
Steve Rotheram, Mayor of the Liverpool City Region, said: “Our area is fortunate to be home to an abundance of world class manufacturers to rival anywhere in the world. It’s their distinctive capabilities and strengths that help to set our region apart from the rest, with industry leading businesses like Surface Transforms on our doorstep.
“This investment we’re making will be transformational in helping them to scale-up their operations – and create quality, highly-skilled jobs and training opportunities for local people.”