PE-backed manufacturer and exporter falls into administration

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Fri, 02 Feb 2024 | ADMINISTRATION

PE-backed manufacturer and exporter falls into administration

Bawtry Carbon Limited, a South Yorkshire-based manufacturer and supplier of carbon cathode blocks, has fallen into administration amid mounting financial difficulties. Chris Petts and Philip Stephenson of Grant Thornton were appointed joint administrators of the company, which is backed by private equity firm Enact, on January 31.

The firm is a 100 per cent exporter which manufactures and supplies carbon cathodes and ramming pastes used in aluminium smelting to a global customer base. The company has a production facility in Doncaster and is one of just a few suppliers in Europe that provides cathodes used for aluminium production.

Despite having a strong presence in a niche industry, however, the firm has suffered major financial challenges in recent years, amid the economic chaos caused by COVID-19, fallout from the war in Ukraine and soaring prices for raw materials and energy. These resulted in significant internal pressure on cash flow.

In the year to December 31 2022, Bawtry Carbon Limited reported turnover of £25.8 million, up from £21.3 million a year earlier, but saw its gross profit fall sharply from £3.9 million to £1.5 million, while post-tax profits fell from £1.9 million to just under £1.3 million.

In response, Bawtry’s directors undertook a strategic review of operations and began exploring options for a sale of the business and its assets. However, this process ultimately proved unsuccessful due to the continuing strain on cash flow, leading to the decision to appoint administrators.

Upon their appointment, the joint administrators decided that operations had to be wound down while the company’s options were explored, with the majority of its 105-strong workforce being made redundant. The administrators are now exploring next steps, in an effort to preserve and maximise value.

Joint administrator Chris Petts said: “Despite the company’s niche manufacturing presence within the EU and strong customer relationships, the severe impact of recent external pressures combined with the credit failure of a key customer meant that it was not in a financial position to continue trading.”

Enact partner Chris Cormack added: “We are naturally disappointed not to have led an ultimately successful turnaround of Bawtry Carbon, which we backed through a MBO in 2019.”

“Over the last four years and through our period of investment, we have been very supportive of the business committing significant capital on acquisition of the business in 2019, and injecting further capital in 2023. However, the macroeconomic events of COVID-19 and the war in Ukraine have been felt throughout the aluminium smelting industry both by the company and its customer base. The credit downgrade of its largest customer has ultimately made it impossible to continue as a going concern.”

In its accounts for 2022, Bawtry’s fixed assets were valued at £3.1 million and current assets at £16.8 million, with the company’s total equity standing at £7.1 million.

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