Liberty House has further extended its network of UK steelworks after saving Scunthorpe-based Caparo Merchant Bar plc “CMB” from administration.
Sanjeev Gupta’s metals and industrials group, Liberty House, has acquired 100% of the share capital of CMB from the administrators of Caparo Industries.
The acquisition is based on the expectation of reaching a final agreement with the pension Trustee concerning Caparo Industries’ 1,700-member pension scheme, and other key creditors of the business.
The company, which employs 145 workers at two fully-automated rolling mills in Scunthorpe, is Britain’s largest producer of merchant bar.
That includes a range of steel bars and light sections for the construction, energy, infrastructure, oil and gas, shipbuilding and transport industries.
The acquisition will complement Liberty’s already substantial network of steel plants in the UK and enable the company to supply the market with an extensive range of steel products.
CMB remained solvent despite its parent Caparo Industries Plc going into administration in late 2015, and since then the directors of the company have kept the business in profit.
However, CMB remained coupled to the Caparo 1988 Pension Scheme which had the effect of restricting CMB’s ability to develop its own financial flexibility.
This placed the solvency of the company at risk potentially jeopardising creditors and the pension benefits of its employees.
Liberty has sought a solution that protects both the business and the pensions of its employees.
Over the last few weeks, Liberty House representatives have been in extensive discussions with the Trustee of the Pension Scheme.
This scheme has some 1,700 members including most of the CMB employees but also existing employees of Liberty though its acquisition of the Caparo Industries business assets in 2015.
Liberty Industries CFO, Derek O’Reilly explained: “We have been working with the pension scheme Trustee to deliver a solution which we believe is deliverable although this area is complex and there is still execution risk.
“However, to prevent the business going into administration, and losing all possibility of a pension solution, it was essential that we immediately acquired the business to provide the possibility to protect CMB employees’ benefits.
“We are also trying to find a solution that gives many other Caparo Industries pension scheme members – currently in PPF assessment - the chance to achieve better benefits than would otherwise have been available."
Sanjeev Gupta, executive chairman of Liberty House Group, added: "CMB fits perfectly into our GREENSTEEL vision for the UK steel industry and completes our product offering to the market. We can now supply an extensive range of both flat and long products, with steel mills in all parts of the country.
“This will enable us to compete more effectively and win market share from imports, helping re-build the UK Steel industry. This is a business with a long history, a great reputation and a very strong order book.
“We are confident we can provide it with a secure future for the benefit all stakeholders. I am especially pleased about the prospect of being able to assist the Caparo Industries pension scheme more widely and improve outcomes for many more of its 1,700 members.
“I am also delighted to welcome today 145 new colleagues to the Liberty family.”