AlixPartners helps British Steel with raising asset-backed financing

26 September 2018 Consultancy.uk

Global consulting firm AlixPartners has advised British Steel on the raising of a £90 million of asset-backed finance injection from White Oak Global Advisors. British Steel has undergone a turbulent period recently, citing a weak pound and euro for the potential downsizing of its UK workforce by almost 10%.

In June 2016, Greybull Capital – which purchased UK airline Monarch for £1 in October 2014, before it collapsed three years later – acquired the long products steel division of Tata Steel Europe, rebranding it British Steel. The deal was similarly completed for just £1, and saved the company from collapse. At the time, no jobs were shed, with AlixPartners advising on raising a £175 million asset-backed financing facility to provide the company with sufficient working capital. The consulting firm also provided general acquisition support advice.

While British Steel remains a £1.4 billion turnover operation, the UK-based steel manufacturer has continued to endure hard times since its 2016 revival. This recently resulted in the group confirming it would reduce its 5,000 strong workforce by 400 at its sites in the UK and elsewhere in Europe, blaming a weak pound and euro for driving up costs. As British Steel bids to secure its future with investment that can push a drive for growth, it has secured much needed asset-backed finance, with AlixPartners once again advising on the deal.

The new senior secured facility sees £90 million of asset-backed finances from White Oak Global Advisors boost British steel. The investment from the San Francisco-based credit fund is the first major FILO (“first-in, last-out”) facility in the European asset-backed debt markets. British Steel will now look to use those funds to kick on from the first phase of a successful turnaround programme, which has seen a rise in profitability increasing from a £80 million run-rate EBITDA loss prior to Greybull’s acquisition, to an EBITDA profit of £47 million in FY17A, the first financial year post-acquisition, and an adjusted EBITDA profit of £68 million in FY18A.

Roland Junck, Executive Chairman of British Steel, commented, “We’re really pleased AlixPartners is continuing to support the rapid transformation of our business. British Steel is embarking on a period of unprecedented investment and this partnership will enable us to further grow our company.”

Jacco Brouwer, Head of Debt Advisory for AlixPartners in London, added, “We are delighted to have been able to advise British Steel on the raising of further financing facilities that will boost the company’s liquidity and position it for further growth through add-on acquisitions and expansion capital expenditure.”