Abingdon
Special Situations
Abingdon
Carpet Manufacturing.
Deal Status: Exited
Total return achieved: 1.6x MM, 68.9% IRR
Overview
Abingdon is a carpet manufacturer and was a subsidiary of US parent Shaw Carpets which entered into administration in 2003. With £40m in turnover Abingdon was a substantial business and needed a solution to technical insolvency.
EPE backed the incumbent management team and invested £2m via an over-lend facility, £1.1m of which was used to acquire stock / raw materials valued at £5m. EPE also negotiated an £8m facility from RBS.
Strategy
Via the administration process, EPE was able to cherry pick the good assets only, and reduced the capacity of the business to its core competence of carpet manufacturing. Manufacturing operations were consolidated from seven sites to one core site in Wales, which historically had contributed over 50% in sales, achieving scale cost savings and simultaneously eliminating excess capacity.
Further, EPE recognised that Abingdon had very limited overdue creditors and a high quality customer base, who indeed remained supportive throughout the process, and EPE was able to secure letters of support from all key suppliers and customers.
Exit
In January 2005 EPE sold its stake back to the management team, achieving a total return of 1.7x money invested representing an IRR of 68.9%.
