Yorkshire Bank backs £12.5m MBO of demolition group

04/04/08

KDC Contractors Limited, the specialist decommissioning, demolition and remediation contractor, has been bought by its management team in a deal worth £12.5m.  The business, with headquarters in Denton, Manchester employs around 100 people and is set to see strong growth over the next few years.

Yorkshire Bank provided over £5 million in senior debt funding and working capital and ancillary facilities to support the deal.  Barclays Ventures provided equity finance while YFM Private Equity provided mezzanine finance.

The deal sees shareholder Barry Kilroe selling the business to the senior management team led by Ian Smithson.  The MBO team - Ian Smithson, Martin O’Donnell, Will Simpson, John Bloodworth and Christopher Sandground - will be joined by Peter Higton as non-executive chairman. Barry Kilroe is to focus on his other business interests in crane hire, property and waste recycling.

Formed in 1985, KDC has demonstrated rapid recent growth and forecasts a turnover in excess of £20 million in the next 12 months.   The business specialises in the decommissioning, demolition and remediation of hazardous sites in the nuclear, petrochemical and pharmaceutical sectors. 

There is a huge drive in the UK to clean up hazardous sites.  The Nuclear Decommissioning Agency has an estimated £72bn clean up programme and there are major environmental pressures on the petrochemical and pharmaceutical industries to make clean large plants, many of which are now redundant. 

KDC has the specialist skills and accreditations to operate in these hazardous environments and is set to benefit from the increasing government spend and legislative and environmental pressures in these sectors. 

Ian Smithson, CEO of KDC, said: “We have seen rapid recent demand for our services across several sectors.  The management team is delighted with this opportunity.  Both Peter and I are looking forward to continuing the successful growth of KDC and I would like to thank Barry Kilroe (the vendor) for his help and support.”

Guy Taylor, associate director, Yorkshire Bank said: "We have been impressed by Peter Higton, Ian Smithson and the opportunities open to KDC.  Based on our experience of the strength of the management team and the levels of growth expected in the company’s key markets over the coming years, we are confident of a successful and long-standing relationship with KDC Group.”

Dion Hirst, investment director, Barclays Ventures said: “We have worked with Ian, Peter and the management team to secure the buy-out and are very confident they utilise the specialist skills of the business to capitalise on the substantial opportunities available to KDC.  The business is well respected in its field and has a track record of working in difficult and hazardous environments.”

Deborah Heyes from YFM Private Equity Limited, said:  “YFM Private Equity were impressed by the quality and experience of the KDC team which displayed professionalism and a high level of sector knowledge”.  

BDO Stoy Hayward advised the management team. Corporate finance partner Pete Terry said:  “The deal will enable the business to take advantage of the considerable growth opportunities offered in the nuclear, petrochemical and pharmaceutical sectors.”

Addleshaw Goddard provided legal advice to the management team, while Gorvins advised the vendor.