Special situations M&A

MBO safeguards jobs for historic paper business

FRP helped to secure management buy-out of Arjo Wiggins

Background

FRP was appointed administrators of the UK operations of paper manufacturer Arjo Wiggins, after insolvency proceedings at the group’s French parent company, Sequana. The company’s origins date back almost 250 years, but the sector had been in structural decline for some time, and increases in raw material and energy costs had placed the group under added financial pressure.

Our Corporate Finance team was appointed to sell the company’s paper mills in Aberdeen and Chartham, Kent – Arjo Wiggins’ two main UK operating businesses. The multi-site operation, a challenging financial reporting and operating environment, and close interest of the Scottish Government created a challenging backdrop to the sale.

Action

The team ran an extensive sale process, approaching around 100 trade and private equity interested parties. FRP entered into exclusivity with a lead bidder, but it soon became clear that they wouldn’t be able to secure the necessary funding, so the team re-engaged with other interested parties before moving ahead with a management buy-out (MBO) proposal. Funding was very challenging – both for the sector and this situation – but our Corporate Finance team worked with all key stakeholders to help deliver a funding solution that enabled the transaction to conclude.

Outcome

The business and assets were sold to the existing management team via an MBO with support from new lenders, the existing secured lender, the Scottish Government, and key suppliers. Our Corporate Finance and Restructuring teams worked on an integrated basis to allow the management team time to agree a funding package. They also gave the secured lenders the opportunity to continue exploring this solution by ensuring that alternative options were available in the event that a going concern solution was not possible.

This approach enabled the sale process to reach a conclusion, saving around 500 jobs at two historic paper mills in the UK, and repaying the majority of the secured debt.

Related team

Geoff Rowley

Geoff Rowley

  • Chief Executive Officer
  • Restructuring Advisory

Matthew Flower

Matthew Flower

  • Partner
  • Corporate Finance
  • London

Iain Fraser

Iain Fraser

  • Partner
  • Restructuring Advisory
  • Aberdeen

Callum Carmichael

Callum Carmichael

  • Partner
  • Restructuring Advisory
  • Edinburgh

Steve Chadwick

Steve Chadwick

  • Director
  • Restructuring Advisory
  • London