In Jan-00 acquired UK manufacturer of parachutes, inflatable equipment and polymer foils & coated fabrics Wardle Storeys plc in a public tender offer at 441 pence per share valuing the equity at approximately £114m. Including £11m in debt and after deducting approximately £15m in net cash the enteprise value of the transaction amounted to £110m. This implied the following multiples for the year ended 31-Aug-99: 95% of turnover (£115m, 2.8x net tangible capital employed), 6.4x EBITDA (£17.1m, 14.8% margin), 7.8x EBITA (£14.1m, 12.2% margin), 11.6x net profit (£9.5m, 6.2% margin), 2.6x net tangible capital employed (£42m).
The transaction was financed with £39.2m in equity and unsecured shareholder loans from the Alchemy Investment Plan (65/35 debt to equity) and a £75m in senior secured bank loans (4.4x EBITDA) consisting of two terms loans from Bank of Scotland (HBOS) paying 200bp and 250bp over LIBOR and a mezzanine tranche paying 1040bp over LIBOR.
Between Oct-00 and Jul-01 the company spent £34m on add-on acquisitions of which the £18.2m purchase of military parachute maker Irvin Aerospace from Hunting plc in Jun-01 (57% of sales, 6.0x EBITA) and the £13.5m purchase of Deutsche Schlauchboot Hans Scheibert GmbH & Co in Jul-01 were the most significant. These acquisitions were funded by a new £30m 12.5% mezzanine loan and a £17m 7% bridge loan both from HBOS.
In Feb-02 the company was split in two separate entities: Air-Sea Survival Equipment Limited (parachute and inflatable equipment divisions) and Wardle Storeys Limited (the technical products division). In order to enable the demerger the companies were refinanced.
In Apr-03 Wardle Storeys Limited further divided forming two entities: (1) Wardle Storeys (Group) Ltd, comprising the three northern sites of Earby, Blackburn and Bangor; and (2) Wardle Storeys Ltd. comprising Storeys Industrial Products operating on the Brantham site.
