BZ has structured and delivered a £16m asset-based lending (ABL) facility to enable David Roberts, industrialist and former group chairman of Arlington Industries until 2014, to acquire Arlington Engineered Systems out of administration.
The acquisition and working capital finance package, which comprises funding against receivables and real estate, as well as a £3m term loan, has secured the acquisition out of administration of a critical supplier to the automotive industry.
The deal, which sees David Roberts take on the role of Chairman, will enable newco, Evtec Automotive (‘Evtec’), to recommence its operations and make further investments in its team and core services. As part of its growth strategy, Evtec will seek to drive turnover from £55m to £70m over the next three years.
The move will save up to 110 jobs and will create 50 more. David Roberts plans to return the business to its Remploy heritage, ensuring opportunities for disabled people across the West Midlands.
Headquartered in Coventry, Evtec Automotive specialises in manual assembly for the automotive sector, including the provision of electrical, fluid and air, mechanical and aftermarket module assemblies. The business will continue to work with clients such as Jaguar Land Rover and Ford as they gear up production following the coronavirus pandemic.
Commenting on the deal, David Roberts, Chairman of Evtec Automotive, said:
“When we kicked off the process, it felt like the debt markets were no longer there for the automotive industry as they had been in the past. It quickly became apparent that we would need to explore alternative funding options away from the traditional banks. When we met with the team at BZ, I explained precisely where we were with the potential acquisition and what we needed and they asked all the right questions. They responded quickly with an innovative deal structure that would not only fund the immediate acquisition but would also provide on-going working capital to help the business to secure further growth. There were many twists and turns along the way and BZ managed their way through each of them diligently and responsively.”
He continued: “BZ is an entrepreneurial lender with a refreshing and creative approach to deal structuring. From speaking to their team, I knew that they would come through and deliver the deal in spite of the challenges facing the industry as a whole and they showed real flexibility in terms of the concentration levels we have with some of our major clients. The team at BZ was absolutely phenomenal to work with. They approached the transaction as a true partner, not just as a lender, and we genuinely couldn’t have done the deal without them.
“Arlington Engineered Systems was a strong and cash generative business, however, the immediate result of the coronavirus pandemic impacted the firm in a way no one could have predicted. Now that production across the automotive sector has kicked back into gear, I believe there is still a strong future for the firm and with the right leadership and financial support I’m confident that we can drive future growth. My immediate focus is to support the team and established customer relationships, and I will then be looking to refocus the business by taking it back to its roots. Evtec Automotive is based on driving innovation through integration. We are particularly excited at the prospect of working with the leading EV marques as we offer the most complex and flexible ‘poka-yoke’ assembly processes that robots just can’t. We look forward to driving the business forward with the continued support of BZ.”
Robert Wakeford, Managing Director, UK Sales at BZ, said:
“This was very much a deal founded and funded on experience. We always look to see the potential in businesses at the heart of Britain’s automotive and manufacturing heritage and are proud to support the management team at Evtec Automotive in achieving their ambitions. We applied our insight and understanding of the automotive sector and its challenges, as well as maintaining a strong focus on both credit and effective deal delivery.
“BZ’s mix of debt and acquisition funding has provided a critical lifeline for the business, securing the continued employment of 110 members of staff and offering exciting new horizons under new ownership. As the business continues to step up its recruitment activity, Evtec will provide more employment opportunities for people with a disability across the region by maintaining that at least 35% of its workforce has some form of disability. We are proud to have made this deal a reality for David and his management team.”
Annabel Todd, Business Development Director at BZ, said: “Under David’s leadership, we’re confident that Evtec Automotive has a strong future and it’s been a pleasure to provide the flexible financial package that will not only support employment opportunities for people across the West Midlands but will also create a business that is truly focused on making a difference to its local community.”
Andy Pickford, Director at FRP in Manchester, added: “We’re thrilled to have secured a sizeable financial package from the team at BZ that gives David the financial backing he needs to kickstart his growth plans, and their support is a sign of confidence in David and his team.”
BZ worked closely on the transaction with Duff and Phelps and FRP in Manchester, with financial due diligence support also provided by FRP’s corporate finance team. Collateral due diligence was provided by European Valuations. BZ was advised by Gateley (legal) and David Roberts was advised by Thrings (legal).
BZ offers structured, multi-jurisdictional ABL facilities from £10 million to £150 million that deliver working capital and corporate structuring solutions.