Silentnight buy-out safeguards 650 jobs
The future of Britain’s biggest bed manufacturer and its 650 Pendle jobs were secured after it was bought by HIG Europe.
But HIG Europe, an arm of global private equity investment firm HIG Capital, stepped in and has bought Silentnight’s business interests, including its brands and all other assets.
Pendle MP Andrew Stephenson has since met representatives of the Pension Protection Fund and said he felt the buy-out was “not an absolutely brilliant outcome but perhaps the best given the circumstances”. He said he would be sitting down with the new owners to make sure everybody involved has their interests protected.
Two weeks ago, Silentnight had proposed a Company Voluntary Agreement to address an unserviceable level of historic debt and a £100m. pension hole.
If the terms had been agreed by creditors, it would have seen suppliers receive 65p in each pound they were owed, and Silentnight make a one-off payment to offload its final salary pension plan.
But a spokesman said despite support from suppliers, employees and HM Revenue and Customs, failed negotiations with the Pension Protection Fund, the largest creditor, made it clear the CVA would be unsuccessful, and the business was forced to file for administration, while continuing talks with a number of potential buyers.
Neal Mernock, chief executive of Silentnight, said: “While we are disappointed the CVA was not successful, this deal with HIG Europe safeguards the jobs of our 1,250 employees and enables Silentnight to continue its proud history of manufacturing and distributing beds across the UK and Ireland.
“Silentnight is now in a much stronger financial position, with healthy short-term cash flow and the longer-term ability to invest substantially in marketing and product development.
“We move into the next phase of Silentnight’s development with confidence and exciting plans to continue to innovate and grow market share as home to both the UK’s and the world’s biggest bed brands.”
Mark Kelly, partner of HIG European Capital Partners LLP, added: “Silentnight is a strong, profitable business with a 21% market share and a position as the largest manufacturer in its sector in the UK and Ireland.
“We are delighted to have acquired a business of this standing and heritage, and look forward to working with the current management team to strengthen and develop its position over the coming years.”
Tim Ellis, UNISON Regional Organiser said: “As a campaigner for ‘Support Our Silentnight’ I am very pleased with the news the Silentnight jobs have been saved, at least in the short term.
“However we have to be a little concerned that private equity groups, such as HIG Europe who have bought Silentnight, are sometimes in it for the asset stripping. The recent example of the Phoenix Group, and Rover comes to mind. We will have to be vigilant on this.”
Bill Roberts joint sponsor of the Silentnight petition said: “While I am pleased Silentnight jobs have been saved there are still questions about extreme difficulties many UK companies are facing due to government-imposed cuts, lack of demand and withdrawal of bank lending. I fear Silentnight, as it goes forward, and other Pendle companies will suffer from these.”
Co-sponsor Ian Tweedie said: “This is great news and gives Barnoldswick a great lift. However it is concerning that the previous owners of Silentnight were only willing to support Silentnight pensions by only 6p in the pound. They do appear to have forsaken their obligations to Silentnight and Silentnight pensions.”
Pendle councillor David Whipp said: “This is good news for workers at the company, but a blow for all the suppliers who’ll now get next to nothing for their unpaid bills.
“Some local companies will be affected by that and there is a potential for some of the suppliers to become insolvent because of what is owed by Silentnight.
“It is encouraging that the new owners are promising investment and will perhaps expand in the future. My overriding concern is to keep Silentnight in business and in Barnoldswick.”
With the Pension Protection Fund set to take over the pension fund and its shortfall, MP Andrew Stephenson said he is keen to make sure everybody’s interests are protected. He said: “Anyone who is part of the pension scheme that has already retired is protected 100% but people who haven’t yet started to receive it will find it capped at 90%.
“I am also going to be contacting the Pensions Regulator to look into the CVA and liquidation. There are still a number of questions and we need to look at the details for the future.
“If any of the trade creditors have lost out in liquidation hopefully it will be made back up in the long-term.”