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July

Joint funding statement by Sheffield Forgemasters and HM Government

20 July 2010

Last week the Board of Sheffield Forgemasters met senior Government officials together with advisors from the financial sector, to consider options to finance the 15,000 tonne press project after the withdrawal of an £80 million loan that had been conditionally offered by the previous Government. The meeting considered what alternative funding sources might be available to fill the gap after strenuous efforts by all concerned.

The conclusion of the Board and financial advisors from these discussions was that, without support along the lines of the withdrawn conditional loan offer, there is no easily available private sector alternative funding structure which is both economically viable for the Company and fair to existing shareholders, having regard to the time and money they have invested in Sheffield Forgemasters since the buyout in 2005.

Speaking after the meeting, Sheffield Forgemasters Chief Executive, Graham Honeyman reinforced the company's growth plans despite the loan decision setback, he said: "We are still keen to undertake the 15,000 tonne press development but feel that the company's best interests will be served by suspending work on the project for the time being. The opportunities in global nuclear will continue to grow.

"This pause will give the company, which has invested more than two years and significant funds to this project, time to resume a greater focus on growing our business into civil nuclear and other sectors. We will continue to pursue other development opportunities based around our 10,000 tonne and 4,000 tonne forging presses and our recently completed programme of machine shop improvements.

"As our thinking develops we will of course take up the Government's offer of further discussions. The company recognises the difficult financial position faced by the country and accepts the  loan offer will not be reinstated."

Business Secretary, Vince Cable, commenting on the discussions, said, "I understand that this outcome is disappointing for the Company and its employees, who have acted very professionally and responsibly throughout. I will keep the situation under review and reconvene the meeting of experts with the Sheffield Forgemasters Board when they are ready, to review the investment potential with the company.  

"I look forward to hearing more when I am in India soon, about Sheffield Forgemasters' £30m knowledge transfer package with India's largest power equipment maker, Bharat Heavy Electricals Limited (BHEL). The technology transfer will enable Forgemasters to establish a strong foothold in central Asia, helping to protect future Forgemasters' markets in the sub-continent and serving India's rapidly growing domestic market for turbine and power generation products."