In Focus: One man’s meat…
The much predicted bank re-financing frenzy seems to be underway.
Thus far this has tended to be viewed in fairly apocalyptic terms but turnaround specialists and asset-based lenders, for example, are starting to see the opportunities inherent in such a clear out.
The banks are having to tidy up their portfolios and businesses that aren’t doing it for them will be moved on.
As Brendan McGeever, a corporate restructuring partner at law firm HBJ Gateley Wareing in Birmingham said at a recent Insider round table discussion: “The banks are predicting that their business recovery teams will be a lot busier in the SME markets next year.”
But just because a bank doesn’t want to keep a business in its portfolio doesn’t mean that firm hasn’t got something to offer other lenders.
A good example of this is Leamington Spa-based desserts manufacturer Polestar Foods. Unloved by its bank and about to collapse it was recently saved by a cash injection from Privet Capital and asset-based lender Centric Commercial Finance. The bad news is that the Leamington site is to close but at least the company has a future and the deal secured 255 jobs at its factory in Okehampton.
Such deals are not done for altruistic reasons. The companies involved have seen something in Polestar that its bank either didn’t see or wasn’t willing to invest the time and effort in. Turnaround specialists that are willing to work with such a company, which now has working capital to help it in its day to day business, could be the beneficiaries. Yes there will probably be a need for some strategic re-focusing but that after all is what turnaround specialists do. But given a fair wind there’s no reason why Polestar and other such firms can’t succeed.
Polestar is just one example but turnaround specialists tell me they are looking at more and more of these type of situations as the banks look to offload many of the businesses on their books that don’t fit in with their refinancing guidelines. This region is well provided for in the turnaround and asset-based lending markets so hopefully we will see more stories of this type as the year progresses.
Not all of the banks’ ‘cast offs’ will be saved of course but it is to be hoped that those that still have something to offer will be picked up.
Certainly there seems to be a spike of activity amongst turnaround specialists. Just this week Birmingham’s Endless bought Willenhall steel bars company Niagara Lasalle (UK) Limited from its US parent organisation Niagara Corporation for £27m, demonstrating that manufacturing companies remain of interest to investors if their business story stacks up.
Turnaround specialists had a quieter 2010 than they expected as banks held onto their assets. 2011 is shaping up to be a very different story.
Comments? Andy Coyne, Insider
