Liberty acquires Caparo Industries

Metals and industrials group, Liberty House, has acquired from the administrators of Caparo Industries 100% of the share capital of Caparo Merchant Bar plc (CMB).

Despite Caparo Industries Plc going into administration in late 2015, CMB remained solvent and the directors have kept the business in profit. However, CMB remained coupled to the Caparo 1988 Pension Scheme which had the effect of restricting its ability to develop its own financial flexibility, risking the solvency of the company and potentially jeopardising creditors and the pension benefits of its employees.

Sanjeev Gupta, executive chairman of Liberty House Group, said that CMB fitted perfectly into Liberty's GREENSTEEL vision for the UK steel industry. "We can now supply an extensive range of both flat and long products, with steel mills in all parts of the country. This will enable us to compete more effectively and win market share from imports, helping re-build the UK Steel industry," he added.

"This is a business with a long history, a great reputation and a very strong order book. We are confident we can provide it with a secure future for the benefit all stakeholders. I am especially pleased about the prospect of being able to assist the Caparo Industries pension scheme more widely and improve outcomes for many more of its 1,700 members. I am also delighted to welcome today 145 new colleagues to the Liberty family.”

According to Liberty, the acquisition is based on the expectation of reaching a final agreement with the pension Trustee concerning Caparo Industries’ 1,700-member pension scheme, and other key creditors of the business.

Derek O’Reilly, chief financial officer of Liberty Industries, commented: “We have been working with the pension scheme Trustee to deliver a solution which we believe is deliverable although this area is complex," he said. 

“We are also trying to find a solution that gives many other Caparo Industries pension scheme members – currently in PPF assessment – the chance to achieve better benefits than would otherwise have been available," O'Reilly explained.

The company employs 145 workers at two fully-automated rolling mills in Scunthorpe and is Britain’s largest producer of merchant bar for the construction, energy, infrastructure, oil & gas, shipbuilding and transport industries. The acquisition is said to complement Liberty’s already substantial network of steel plants in the UK and enable the company to supply the market with an extensive range of steel products. 

Liberty has sought a solution that protects both the business and the pensions of its employees. Over the last few weeks, Liberty House representatives have been in discussions with the Trustee of the Pension Scheme. This scheme has some 1,700 members including most of the CMB employees but also existing employees of Liberty through its acquisition of the Caparo Industries business assets in 2015. 

Matthew Hammond, one of the joint administrators of Caparo Industries PLC (in administration) and certain subsidiaries said the administrators have worked with the pension Trustee (including their advisers and stakeholders), CMB and its other financial stakeholders over many months to explore the options for a solvent rescue of CMB and a better outcome for the pension scheme and all other creditors of the Caparo Industries administration estates. 

"We are delighted to confirm that, with the cooperation of Tata, the minority shareholder of CMB, we have today completed a sale of the entire share capital of CMB to Liberty. We would like to thank the directors, management team and employees at CMB for their continued co-operation over 20 months which enabled the completion of the share sale," said Hammond.

Julia Yates, pensions director at PwC working with the administrators, added: "Even in situations of complex group insolvencies, it is still possible to target a better solution for schemes and their members through the constructive dialogue achieved with the Trustee."