A DRAMATIC UPTURN in the profitability of loss-making steelwork contractor Cleveland Bridge allowed its seven strong management buyout team to finalise the £8.3M deal last week without the need for external finance.
MBO leader and company chief executive Tony Rae claimed the Darlington-based firm's £11M half year loss reported 15 months ago would be turned around to an annual £2M profit by December.
'The upturn gave us the added confidence to use our own money without recourse to venture capital, ' said Rae. 'Such a move is rare, especially in construction, but allows us the freedom and flexibility to develop the company as we want to - a contractor first and steel fabricator second.'
The year long buyout negotiations with previous owner Kvaerner took twice as long as expected. But Rae claimed the new company had emerged 'to face an unprecedented market in overseas bridge building'.
He said he expected turnover to double to £250M within three years, with most of the extra work from the burgeoning US bridge new build and retrofit market.
By concentrating on main contracting, rather than the steel fabricator role adopted by Kvaerner, the company is bidding for four US bridges worth £620M. It already has a £115M contract for a San Francisco suspension bridge won in January and, within 24 hours of last week's MBO completion, it won a £12M bascule bridge contract in Argentina.
Rae claimed the Chinese market also offered at least five long span bridges over the next few years. He added that he had set up a permanent joint venture with a local steel fabricator on the banks of the Yangtse river.
Under the new management, design and build expertise for steel and concrete structures will remain in Darlington, with steel sourced worldwide including the company's yards in Dubai and Malaysia.
'The only external finance needed will be for bond guarantees, especially in the US, ' said Rae.