BELFAST BRIEFING:One firm has become a global byword for survival – while others continue to struggle, writes FRANCESS McDONNELL
THERE HAS never been a better time to be in the survival business in Northern Ireland. Whether you are a local politician in between scandals or a Dunmurry-based life saving and defence equipment manufacturer, it is all about keeping your head above water in these turbulent times.
There are many in the North who think the Executive is going to need a pretty big lifeboat to attempt any rescue of the local economy. Where better to look then than Survitec, the Northern Ireland-headquartered group which specialises in survival technology and has
recently been acquired in a £280 million (€322 million) deal.
The group has had a presence in the North since 1920, when Reginald Foster Dagnall first established RFD to manufacture lifeboats. It has successfully navigated the choppy waters of mergers, acquisitions, management buyouts and takeovers. By the end of this month Warburg Pincus, a global private equity firm, will hold a majority stake in the company, with management retaining a minority stake while still running the business.
Warburg Pincus said it was attracted to the Northern Ireland group because it was a “global leader in its markets, with proven long-term sustainable growth and resilience to economic cycles”.
The private equity firm is not the only one with a stake in Survitec’s future. Banks which put up the finance for the deal, including Bank of Ireland, are watching closely to see where the group goes from here.
But perhaps the most important stakeholders are Survitec’s workforce, which chief executive Doug Baxter believes are the key drivers behind the group’s ability to stay at the forefront of safety and survivability technology. “At the heart of Survitec’s success are the 1,300 employees who work across our manufacturing and servicing sites in Europe, North America, Asia and Oceania, delivering our products to more than 7,000 Survitec customers.”
The Dunmurry group, which had sales of £150 million last year, has built a global business from the development of marine, defence and aerospace survival technology.
Next time you are listening to the safety drill before your flight takes off, there is a very good chance that the lifejacket you hope you will never need was designed and manufactured by Survitec.
So why can one Northern Ireland firm become a global trademark for survival, while others flounder in the deep waters of the recession?
The example of Graham Heslip, once one of the largest commercial printers in the North, is a case in point. It filed for administration last December.
The print company’s administrators, BDO, said the company had been impacted upon by the downturn in the economy and in particular in the Republic of Ireland.
Graham Heslip was sold out of administration to Northern Ireland-based company CR Print in a“pre-packaged deal”. This is a completely above board and legal process that allows a company that has been successful but has hit cash flow or finance problems to be put into administration quickly and then sold on to what is often described as a phoenix company.
It is called a phoenix because it usually shares the same directors of the old company – in this case the former managing director of Graham Heslip, Diarmuid McGarry, is a director of CR Print.
In a pre-pack deal, the debts of the failed business remain with the old company, which enables the phoenix company to start trading with a clean slate.
According to Graham Heslip’s administrators, the sale of the business to CR Print has rescued 81 jobs in Northern Ireland which might otherwise have been lost. But it has also left around 200 former unsecured creditors of Graham Heslip, owed an estimated £3 million, high and dry.
This raises the question about who needs rescuing most in this kind of deal. Is it the employees who have done nothing wrong, or other businesses which might end up floundering because of bills that go unpaid?
Sometimes what may appear to be a lifesaver is in fact just a bailout.
