19 September 2006
Sheffield Forgemasters rescued from closure
Only 12 months ago, Sheffield Forgemasters International (SFIL), stood on the brink of disaster.
In a remarkable turnaround involving the determined intervention of the City's leaders and MP's, the historic company moved from being hours from shutdown to global economic success story.
Now with a turnover of £100 million, SFIL exports 80 percent of its products, has offices worldwide and an order book worth £100 million.
The MBO hinged around a £65m deficit carried by Forgemasters £120m pension fund, which made a buyout implausible. This was compounded by a £10m inter-company debt and a possible £10m clean up cost for a French Foundry left by the US owners.
The deal was made possible through a complex landmark agreement aided by the government's Pension Protection Fund (PPF) - only the second ever resolution worked on by the PPF.
The combined efforts of the local MP's and other Sheffield leaders enabled the closure of the deal as their support brought the PPF and the MBO team together to find a way forward.
Clive Betts, MP for Sheffield Attercliffe, said: "I am really pleased that with help from other local MP's and myself, the PPF was persuaded to offer assistance to ensure that a successful MBO secured the future of the company."
Richard Caborn, Minister for Sport and MP for Sheffield Central, has long family links with Forgemasters and backed the MBO plans from the outset.
"Sheffield Forgemasters is a hugely important South Yorkshire company, which has employed generations of Sheffield families including my own, which made my own involvement even more pertinent," said Richard.
This view was reflected by Sir Bob Kerslake, Chief Executive of Sheffield City Council, who said: "The service that Sheffield Forgemasters provides to our national and regional industry cannot be ignored. They are an important employer and have a superb approach to putting skills back into the UK steel industry.
For more than four years, chief executive Graham Honeyman, together with a close-knit team, maintained a vision for the 200-year-old engineering company, staving off liquidation to save jobs, pensions and 1,200 suppliers from possible economic collapse.