Newarc Group is a long-established manufacturer and distributor of welding equipment and associated consumables. With good brand recognition, the business also has a strong rental division hiring equipment to customers working both on and off-shore, largely in the oil and gas sector. The four-company group operates from its headquarters in Newcastle, and from premises in Aberdeen.
A lack of demand due to a significant contraction in the oil and gas sector, compounded by an increase in competition driving down margins, resulted in acute cashflow difficulties in Q4 of 2019. A number of third parties had expressed interest in buying the business, but due to the group’s financial position, no firm offer had been made.
FRP was appointed to advise the Board on its statutory duties and to consider the restructuring options available to the company. After the management explored the various options, our Restructuring Advisory team was instructed to begin a confidential accelerated marketing process, to find a buyer for the business and its assets as a going concern. The SIP16-compliant marketing process resulted in a number of expressions of interest in the business, were a sale to be completed following the administration of the company. After negotiations with a small number of potential buyers, best and final offers were secured from two bidders.
Following further negotiations, an enhanced offer was secured for the whole of the group’s business and assets, including the transfer of all 17 jobs and the continued trading of the Aberdeen and Newcastle sites. The outcome for creditors was significantly enhanced through the going concern sale, while also providing certainty for customers. Wholesale Welding Supplies Limited (Weldability) now operates the business from both locations.
An enhanced offer was secured for the group’s business and assets, including the transfer of all jobs and the continued trading of both sites.Martyn Pullin Partner