Patron Capital has re-expressed an interest in buying all or part of the troubled Merseyside shipyard Cammell Laird.
Patron Capital lines up alongside fellow VC Alchemy, an MBO team and UK and German shipyards as potential buyers of the business.
“We originally expressed an interest in Cammell Laird to advisors pre-receivership,” said Keith Breslauer, principal and fund manager of venture capital firm Patron Capital. “But we had some very specific issues with the business which have now surfaced.”
Receivership has made the company more attractive to Patron. “It has increased our interest,” said Breslauer. “Before there was great confusion as to what exactly was in the company and how it was going to get bought. Now everything is clearer.”
However, Breslauer could not say how much the bid would be worth and what form it would take. “Who knows?” he said. “We support a management team which with us has re-expressed an interest to buy a substantial piece of Cammell Laird. What that means, what does the trade look like, I can’t say. But we have plenty of capital, let’s put it that way.”
Breslauer said the UK business is more immediately interesting to Patron because its situation is clearer. “We invest in asset-based entities, not in entities in which it is difficult to determine the underlying asset value,” he said. “If you look at Cammell Laird, the UK business is quite clear an asset-based investment.
“The European business in terms of capital outflow and commitment is more of an operating story,” continued Breslauer. “It is more difficult to sort through. So the UK business is more interesting. This is also why we are quite interested in buying Simon Group .”
In January, Patron made an approach worth 75p a share to Simon Group, which owns and operates Port Sutton Bridge and Killingholme on the UK's east coast.
In the event of a successful bid, Patron’s management team would work with the existing team to build the business. But Cammell’s management may have different plans. Chairman Juan Kelly and acting CEO Jon Schofield are talking with private equity houses to try to raise backing for an MBO.
Patron also faces a possible rival bid from Alchemy, which PEO revealed was still in the running after having reportedly ruled itself out. The two other bidders talking to the receivers from PricewaterhouseCoopers are believed to be from Swan Hunter, a Tyneside shipbuilder, and German yard Lloyd Werft.
Cammell Laird’s problems began when a £51m contract to work on a cruise liner belonging to Italian cruise operator Costa Crociere was terminated after the shipbuilder had spent £40m. It then failed to land a £348m contract for American cruise operator Luxus and slid into receivership. Cammell Laird had revenues of £129m in the year ending October 31 2000.
Patron has just made the first closing on its Patron Capital Partners fund having raised equity of $70m. Patron Capital Limited, established in 1999, has a background in real estate and asset-backed transactions and focuses on Western Europe.