Gresham backs MBO of aerospace business

Credit management firm bought by its managers

Gresham Trust leads £18.2m re-engineered buy-out of Page Group

Investment capital house Gresham Trust has led the £18.2m management buy-out of Page Group Ltd, a manufacturer of specialised electronic and electro-mechanical equipment for the international aerospace and marine markets.

Gresham Trust has invested £4.5m in the new Group. It is the first investment using funds from the Eagle Star Co-Investment Plan, a new £120m equity pool launched by Gresham Trust in September.

Based at Sunbury-on-Thames, Page Group has a wide product range including electrical power conversion, digital systems and controls, and warning systems. Specific products include emergency and interior lighting for aircraft and ships, power supplies, engine fire shut-off switches and control sticks.

The business was acquired by a management buy-out team in 1991 from AB Electronics. The current transaction represents a re-engineering of that deal, with Gresham Trust replacing the previous syndicate of institutional investors.

Such re-engineerings are part of a growing trend of refinancings in the management buy-out industry in which Gresham has developed particular expertise. The institutional backers of the first buy-out of Page wished to realise their investment, but management were reluctant to sell given the company’s prospects.

The buy-out team is led by Paul Gibbs, (aged 46) who has been managing director since the first buy-out in June 1991. He is joined by finance director Alan Hayes (aged 59), also part of the original buy-out team. Peter Brooks, a director of Gresham Trust, becomes a non-executive director. The buy-out team was advised by Sally Flanagan and Peter Worlledge of the Private Bank’s Corporate Finance subsidiary.

The company’s international customer base extends to aircraft manufacturers, airlines, shipbuilders and national defence departments. Customers include Airbus, American Airlines, Boeing, British Aerospace, McDonnell Douglas, SAAB and the UK Ministry of Defence.

Page Group believes that it will take advantage of the improving market. Current civil aviation orders have increased markedly over the past 18 months. Page has grown through developing new products and through acquisition. As examples, it gained an increased share of the interior lighting market and has acquired Airsigna in Germany.

The Group’s military sales have also held up, despite defence spending cuts following the end of the Cold War, by producing new products and pursuing upgrading and retrofit opportunities.

Paul Gibbs, managing director, said, "I am delighted that with Gresham Trust’s investment Page Group has secured its continued independence. It is a medium-sized British company, competing successfully in a highly specialised, international market. We believe it can produce increased profits growth."

Peter Brooks, director of Gresham Trust, said, "Gresham Trust is very pleased to back Page Group`s experienced and successful management team. Re-engineered buy-outs have considerable merit for all parties and we will be doing more of them."

Senior debt and mezzanine finance was supplied by the Bank of Scotland with advice to management from the Private Bank & Trust Company.