Negotiations over the sale of the Arjowiggins Fine Papers UK businesses in administration are understood to have reached a critical juncture, with Scottish Enterprise confirming to PrintWeek that it has agreed in principle to offer financial support for the MBO deal.
The historic Arjowiggins Fine Papers Stoneywood mill near Aberdeen, which has nearly 490 employees, and the 90 staff Chartham mill in Kent, together with a sales office in Basingstoke, have now been trading in administration for just over six months.
The businesses employ more than 600 people in total.
An MBO team emerged as the most likely potential buyer last month, after initial talks with a possible buyer failed to come to fruition.
The situation is highly complex due to the number of interconnected Arjowiggins companies and assets, in different legal jurisdictions, which were owned by France-headquartered Sequana. Sequana itself is now in the process of being liquidated.
Furthermore, most of Stoneywood’s output – two thirds – is sold via Antalis, which needs to find a new shareholder or shareholders to take over the 75% stake in the paper merchant owned by Sequana.
PrintWeek can reveal that Scottish Enterprise, which provides grants and funding to businesses in Scotland, has agreed a potential offer of financial support.
A Scottish Enterprise spokesperson said: "We remain committed to working with the administrator and our partners to explore the option of a Management Buyout. We’ve approved draft Heads of Terms outlining potential financial support and we’re supportive of a deal with the MBO team, once the commercial agreement is reached between the administrator, MBO team and lenders.”
Stoneywood general manager Angus MacSween said: “The MBO team are still working on the deal.”
The Chartham mill, which employs 90 and makes translucent papers, is due to go on its annual two-week summer shutdown at the end of next week.
Stoneywood does not have a summer shutdown.
A source close to the situation said: “I believe all is well with the MBO but it’s just taking its time to get signed off. The next two-to-three weeks are crucial.”
Arjowiggins Fine Papers (Stoneywood mill) had sales of £123.6m in its latest accounts, for 2017, and made a small operating profit of £965,000. It makes a wide range of fine and specialist papers including Conqueror, which has been made at the site since 1888, as well as the Curious range, Keaykolour, Pop’Set and papers for the local whisky market.
Arjowiggins Chartham had sales of £14.4m for the same period, and broke-even.
A spokesman for the administrators at FRP Advisory said: The situation remains the same as it has been. The joint administrators are working with the management buyout team on their proposals, meanwhile the business continues to trade as normal.”