Forgemasters offer their shares at half price
SHEFFIELD Forgemasters International is offering its 700-strong workforce the chance to buy a stake in the company at half price.
Forgemasters chief executive Dr Graham Honeyman pledged to offer workers a chance to buy shares in the business when he led a management buy-out two years ago.
The buy-out saved 600 jobs at the Brightside Lane company, which makes some of the largest and most complex forgings and castings in the world.
It also ended two years of uncertainty which began when the Forgemasters’ American owners collapsed, ensured Forgemasters’ suppliers would be paid in full and workers would get maximum protection for their pensions.
As part of that deal, the Government-backed Pensions Protection Fund and administrators PricewaterhouseCoopers were given a 30 per cent stake in the company in return for covering some of Forgemasters’ liabilities, including its insolvent pension fund.
Forgemasters has now struck a deal to buy back that stake and plans to offer workers a chance to buy those shares at half their current value - 80p instead of 1.60, using loans at preferential terms, if they want them.
The company is also covering any tax issues that arise for workers who buy shares, putting in place arrangements for an annual valuation and making provisions to buy back shares if workers want to sell them when they leave or retire
As fate would have it, Forgemasters learnt that agreement on the buy back from the Pensions Protection Fund and PricewaterhouseCoopers had been reached the day after parts of the works had been flooded to a depth of six feet.
But, with the support of its bankers and insurers the company decided to go ahead and redeem its promise to the workforce.
Forgemasters’ chairman, Tony Pedder, says current year results for the business will be affected as a result of the flooding and it does not yet know how much it will recoup from its insurers.
At the same time, Forgemasters needs to make good years of under investment by its former owners, but, it did not want to waste the efforts put in to the lengthy negotiations with the Fund and administrators or to delay offering workers a stake in the business.
Mr Pedder said: “This is a crucial milestone for the company. One of our commitments to the staff at the time of the MBO was that the company would look after its workforce.
“This offer of shares to the workforce is a major part of that commitment.”