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Management to buy Cleveland

NEWS

KVaeRNER CLEVELAND Bridge is set to be sold to a group of its own senior directors and managers, it emerged this week.

An eight-strong management buyout team is understood to have submitted the most favourable bid for the loss making steelwork contractor which was put up for sale by its ailing parent three months ago (NCE 15 April). The £15M-plus deal is expected to be finalised in weeks.

Financial advisor Deloitte & Touche was appointed by Kvaerner last week to help analyse the bids. But NCE has learnt the five alternative offers from outside the business are considered substantially less attractive.

The management buyout team includes directors from the Darlington based company's overseas offices in Dubai, Malaysia and Hong Kong. Current managing director at Darlington, Ramsay Ross, will not be part of the group which is headed up by Hong Kong based director Tony Rae.

Rae, an Australian civil engineer, has been with the company just 18 months. He previously set up and managed several construction companies in the Far East. He was brought into the Darlington headquarters in January to oversee Kvaerner's restructuring programme, planned before the decision to sell.

Rae declined to comment on the deal but sources close to the company have said he had already achieved an 80% increase in productivity in the fabrication yard this year.

Cleveland Bridge gained a strong reputation for bridge building through its involvement in prestige projects such as the Rodenkirchen suspension bridge near Cologne, the Tsing Ma crossing in Hong Kong and most recently on the Jiang Yin crossing of the Yangtse river in China. However, the infrequency of such big orders and the poor margins on steel fabrication work, meant that it lost around £2.8M last year and fell under the axe of Norwegian based Kvaerner's general cost cutting plan in April in which it opted to sell off all non-core loss-making companies worldwide.

Construction analysts welcomed the possibility of a 'friendly' management buyout. It would, they said, cause least disruption and free the company from the pressures of a new multidisciplinary parent.

It is understood that apart from the in-house team, no major UK groups have made an offer for the business. Interest came instead from Australia, Turkey and France.

If the management bid is accepted, the business would return its focus to building bridges and main contracting rather than the company's current prime role as steel fabrication subcontractor. A recently finalised permanent joint venture in China with a local contractor would open the door to at least nine new long-span bridges.

No one from Kvaerner was available for comment as NCE went to press.

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