Crisis talks underway at £87m-turnover manufacturer

Emergency discussions are taking place over the future of a Scunthorpe steel manufacturer, Caparo Merchant Bar.

The £87.8m-turnover business is being crippled by heavy debts and its previous owner’s administration, having to write off £22.7m of loans to its parent company Caparo Industries.

Caparo Industries and Caparo Steel Products both went into administration in October 2015, with CMB listed as an unsecured creditor.

CMB converts primary steel products sourced from third parties to finished goods, operating two hot rolling mills at its Scunthorpe base, where it employs 160 people. According to its website, it has an annual capacity of 400,000 tonnes and supplies customers across the UK and Europe.

At the time of its last results for 2015, CMB management said it was “cautiously optimistic” of an upturn in its fortunes, despite the declining price of steel products.

Now however, several companies are circling for the business, according to the Telegraph, during a period of major change and consolidation for the steel industry.

Sanjeev Gupta’s Liberty Industries Group, which helped save swathes of the Tata Steel business, is reported to have approached the business with talks ongoing to save the manufacturer.

Greybull Capital-backed British Steel has also been tipped as a potential bidder for the firm. The company supplies CMB and was set to take on Tata Steel’s 25% stake in the business, but legal setbacks have affected the deal.

A British Steel spokesman said: “Caparo Merchant Bar is a long-standing customer of ours. We are in regular dialogue with them and that will continue. We are always looking for opportunities that complement our businesses. However, we cannot comment on any individual cases.”

Caparo Industries’ administrators PwC declined to comment when contacted by TheBusinessDesk.com.

 

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