Doncasters set to be broken up
Engineering firm Doncasters is poised to go into talks about restructuring its debts as it prepares for a break-up that could lead to it splitting into as many as eight businesses.
The company, which has a site on Whitchurch Road in Shrewsbury, is expected to move to refinance borrowings of almost £614 million before the end of next month and it hopes to agree fresh terms with its lenders before the end of the year.
With most of its debts falling due for repayment in stages beginning early next year, success would buy Doncasters time to auction off assets at its own pace.
The dismemberment of the Staffordshire-based company is likely to leave little or nothing on the table for Dubai International Capital (DIC), the sovereign wealth fund that paid £700 million to take control of the group in 2006 but is far behind the lenders in the repayment queue for proceeds from any asset disposals.
DIC is owed £488 million by Doncasters through a shareholder loan that does not come due for repayment until 2021. Unless the company can generate more from its asset sales than it has as debts, the fund is unlikely to be repaid when the loan matures.
Doncasters specialises in high-precision alloy components, castings, forging and stud welding equipment. It makes a wide array of parts, including blades, exhausts and aerofoils for the aerospace industry, casings and rings for industrial gas turbines, ethylene tubes for petrochemicals companies and missile fins, housings and components for launch systems.
It employs 3,200 staff at its manufacturing facilities in locations including Shrewsbury, Sheffield, Chard in Somerset, Droitwich in Worcestershire, Ryde on the Isle of Wight, Pontypool in south Wales and in the United States and continental Europe.
The company’s lenders are being advised by PJT Partners, the investment bank, and Latham & Watkins, the law firm. Doncasters also has turned to Weil, Gotshal & Manges as a legal adviser. The lenders include Brigade Capital Management, a New York-based hedge fund, as well as CVC and Carlyle, the private equity investors, and investment funds including Credit Suisse Asset Management and Barings.
Doncasters declined to comment.