Steel stockist and supplier Avon Steel, which was rescued from a cashflow crisis four months ago, has secured a £2m invoice finance facility as it looks to take advantage of an expected resurgence for the industry.
Demand for UK steel is forecast to grow in the face of rising import prices. The government’s Industrial Strategy published in December predicts UK demand is set to rise to 11m tonnes a year by 2030, which could boost revenues for Britain’s steel industry by £3.8bn.
Avon Steel, which provides steel to the construction and engineering sector, was acquired by privately owned boutique investment firm Breal Capital last November after it brought in experts from the Bristol office of restructuring specialists Quantuma to help solve its cashflow problems.
The £12m turnover firm stocks more than 1,500 tonnes of steel at its main site in Midsomer Norton and depot in Plymouth. It also has a sales office in Cardiff.
The firm, which was founded in 1981 and now employs 49 people, arranged the invoice finance facility from Secure Trust Bank Commercial Finance to fund working capital for cashflow as well as possible acquisitions.
Managing director Simon Parson said: “Following Breal Capital’s acquisition in late November, we were aware that we would need a finance facility that would support the future growth of the business and provide access to much-needed working capital.
“We chose to work with Secure Trust Bank Commercial Finance because of its refreshing approach to lending. We’re now able to set our eyes on future targets and embark on the next phase of our acquisition strategy.”
Secure Trust Bank Commercial Finance director David Parsons added: “Avon Steel is in a good position to take advantage of the steel industry’s resurgence in the coming years, with more companies likely to seek local steel over expensive imports.
“Having worked with Simon and the team, it was clear that the flexibility we were able to offer was of great value to the business, enabling it to restructure its balance sheet and gear up for future growth.”
Breal Capital, whose companies employ more than 2,000 people, is looking to acquire other steel stockists and distributors of steel as it prepares for the surge in popularity of UK steel.
