Tuesday, January 5, 2016

News: Agreements extended at Kiveton Park Steel

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Supply agreements have been extended at Kiveton Park Steel, allowing the award-winning Rotherham-based manufacturer to continue to trade whilst it is in administration.

FRP Advisory, the restructuring and advisory firm appointed as joint administrators to Kiveton Park Steel Limited has confirmed that it has secured a further extension to key customer supply agreements which ensures the company has sufficient funding to continue to trade until the end of June 2016 whilst the joint administrators market the business for sale and ongoing engagement with interested parties continues.

Established in 1922, the family company originally produced items used within the UK mining industry and also supplied specialised products into the defence and aircraft industries. It has developed its unique range of production equipment to ensure that the manufacturing facility at Dog Kennel Hill in Kiveton Park is suited to supply chain requirements for critical parts within the global automotive markets, principally supplying Tier 1 and Tier 2 companies.

Phil Pierce and Ben Woolrych, partners of FRP Advisory, were appointed as administrators after the business has recently faced unsustainable pressure on its cash-flow due to a sharp deterioration within the specialist steel market.

The supply agreement extends an earlier agreement secured in early October that was to run until the end of December 2015. The six month supply agreement extension secures jobs for the approximately 100 staff currently associated with the business. The supply agreement supports the joint administrators' on-going engagement with third parties who are interested in investing in the business.

Automotive suppliers, Delphi and TRW are the company's main customers. As part of the agreement, they agreed to pay their pre-administration debts of around £1.2m which has helped Kiveton Park to continue to trade. This ongoing trade has enable the administrators to supply other customers, assisting the recovery of the business.

A report from the administrators shows that 13 expressions of interest have been shown in the award-winning business and assets, with eight still "live." Many more parties have been interested in the assets of the business on a break up basis but this has not been pursued.

The report said: "A number of site visits have been conducted and these continue to be arranged for interested parties. Discussions are ongoing with a number of interested parties and information is being provided for them to consider the options further."

The joint administrators said that it continues to review staffing levels but the securing of the latest extension to the supply agreement means that the administrators have been able to retain the 100 staff.

Phil Pierce, partner at FRP Advisory and joint administrator, said: "The steel industry continues to feel the squeeze from a global downturn in the market so we are pleased to have secured further funding support for Kiveton Park Steel for a significant period while sales talks continue. This funding agreement will be particularly welcome to the firm's staff and their families as we enter the festive period and we are grateful for all their support during this period.

"The wider steel market remains challenging but Kiveton Park produces quality products and has loyal customers which all helps with a sound continuity of trading whilst we continue to engage with interested parties as part of the ongoing business sales process."

Kiveton Park Steel website

Images: Kiveton Park Steel

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