Management Buy-In of Fastflow Pipeline Services Limited from Northumbrian Water Limited, a subsidiary of Northumbrian Water plc (“NW”)
The opportunity
Fastflow employs 240 staff and operates from premises in Washington, near Newcastle-upon-Tyne. The company designs, builds, rehabilitates and maintains the underground infrastructure for blue chip utility companies and has a turnover of £18 million. Fastflow also has a sewer rehabilitation division, which uses specialist skills and equipment to refurbish sewers for many of the UK’s water companies.
Mr Armstrong (the MBI candidate) believes that “ Most utility companies are dissatisfied with the current level of service that they receive and the associated high costs. Fastflow aims to address this by providing better value for money, a quicker response time and a more personable service”.
The company will continue to work with for Northumbria Water and has recently signed a new contract for NW’s s19 works and has an existing contract to assist in minor works including leakage repair and services.
The Approach
Our work provided both the mezzanine and debt provider with a clear understanding of the business and deal related issues, together with comfort thereon and potential solutions where appropriate (including a significant late minute VAT issue which arose), recommendations as to warranties and indemnities that should be obtained from the vendor and opportunities for price negotiations.
Vantis Corporate Finance provided lead advisory services, financial assistance, completion accounts, keyman insurance and reviewed the overall tax structure of the transaction and, at the last minute, VAT advice to ensure the transaction was completely efficiently and effectively.
The Objective
The key objectives were:
- Work alongside the MBI candidate to prepare a detailed business plan and forecasts;
- Identify and approach key private equity and debt providers to support the transaction;
- Undertake all negotiations and achieve Heads of Terms with the vendor (NW); and
- Manage the transaction to completion.
The Result
The deal was completed in July 2005.
The total funding requirement for the deal was £3.5m million.
The "all debt deal" was supported with term debt and a working capital facility from the Bank of Scotland and a mezzanine facility from Evolve.
Comment
Completion of this deal was the culmination of 18 months of hard work and commitment from both Vantis Corporate Finance and our client.
"VCF played a critical role throughout negotiations and during the deal execution phase. The long term commitment of our Corporate Finance team meant we were able to deliver a very complex, all debt, MBI in an industry with difficult assets to leverage.”
Carlos Garrido (Director of Vantis Corporate Finance)