CRONITE SCOMARK

Background

Established in 1973, specialist engineering business, Cronite Scomark, built up a strong technical reputation serving the petrochemical industry. Comprising a pipe manufacturing plant in Sheffield and a welding and fabrication facility near Derby, the company manufactured and assembled complex, high integrity pipe systems.

More recently, Cronite Scomark’s financial performance had been poor and its parent company was seeking to divest the loss-making business. However, efforts to achieve a trade sale had been unsuccessful and concerned clients had begun to suspend orders. The situation was exacerbated by production constraints forcing the plant’s output below break-even.

Hilco Capital’s role

• Acquired equity and unsecured debt
• Provided additional £500k working capital facility
• Provided specialist operational support
• Rapidly implemented new control processes to improve financial integrity and management of the company
• Worked with management and technical teams to create detailed 90 day improvement plan
• Plan covered time-based actions in 12 key areas including output improvement, health and safety compliance, management reporting and controls, resources and cash management
• Devised and introduced KPIs to enable management team to track progress on weekly basis

Results

• Smooth divestment of subsidiary from parent achieved in accelerated time frame through use of specialist resources
• Financial support allowed completion of existing ‘in build’ projects and ensured forward order commitments would be met, unlocking £8m backlog
• Operational turnaround required minimal capex and delivered 35% increase in spuncast pipe production within four months
• Pipe manufacturing processes rapidly restored to profitable output levels
• Key forward contracts secured through demonstrable improvements and additional working capital support