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Reponse to government's announcement to overturn a pledged £80 million business development loan

23 June 2010

Graham Honeyman, chief executive at Sheffield Forgemasters, said: "Sheffield Forgemasters' board of directors have met to further consider the announcement by the new coalition Government to cancel an £80 million loan offered by the last Government."This company continues to trade profitably and remains unaffected by the Government's decision on an operational level.

"At this stage, we wish to express huge appreciation for the massive support the company is receiving from UK organisations, businesses and individuals, including so many from Sheffield and we welcome this ongoing support as we move forward.

"The company's proposed business expansion plan to install a 15,000 tonne press still offers a real opportunity for the company to create new jobs in Sheffield and in the subsequent supply chain and to give a major boost to UK manufacturing industry on a global level. We have no intention of standing still and will continue to explore all avenues for business development.

"Over the past two years, we have worked with Government advisors, including the Shareholder Executive's own corporate finance experts and negotiated a financing package which included the previous Government's loan and a substantial equity injection from the private equity market.

"That private equity portion was agreed to be at a level which filled the funding gap without creating unserviceable levels of debt for Sheffield Forgemasters and without excessively diluting the shares of the workforce, who collectively own 100 per cent of its shares.

"Despite these prolonged and considered efforts, we have to accept that the negotiated public sector loan element of the funding package is no longer an available option.

"Our board of directors will continue to engage constructively with strategic corporate investors as well as private finance providers to explore other funding options for the 15,000 tonne press project and the Government's offer to work with the Company on this is welcomed."