TWO SPECIALISTS at investing in troubled companies are spearheading the takeover of DIY and builders’ suppliers chains Brooks and Heat Merchants by private investors.
Building materials multi-national, Wolseley, has sold its Irish business, Brooks, Heat Merchants, Tubs Tiles and Encon, to a London-based firm, WIBHM Ltd for €26.5 million.
WIBHM’s director is James Weight and its company secretary is Roland Houchin. Both are partners with London private equity firm, Epic, which specialises in buying into “distressed” small and medium-sized enterprises.
Epic is not involved in the Wolseley Ireland deal. Mr Weight and Mr Houchin are not investors in their own right, but are acting for a group of private backers. It is understood that none of those who are putting up the money is Irish.
Mr Weight worked with Fortress on the €200 million buyout of digital television operator, Boxclever, from administration in 2005. Boxclever’s failure was the biggest bankruptcy in Britain up to that time.
Mr Houchin was educated at Trinity College. During his career, he has worked at NM Rothschild and PricewaterhouseCoopers.
The private investors are backing Wolseley Ireland’s management, led by chief executive, Pat Roche, all of whom are to remain in place.
Mr Roche said in a statement last week that it would be “business as usual” at the four operations, and said the only thing that would change as a result of the deal would be the owners.
Under the terms of the deal with Wolseley, WIBHM will pay €6.5 million up front. The remaining €20 million will be the subject of a loan note issued to Wolseley, at a rate of 10 per cent. This has to be repaid in a year.
Along with this, Wolseley has agreed to cover the €5.5 million deficit in its Northern Irish pension scheme. The new owners will begin repaying this at the end of their second year, at 3 per cent. The repayments will be €1.5 million a year.
Those debts will be fully secured against Wolseley Ireland’s freehold properties.
According to Wolseley’s statement, in the year to July 31st last the businesses had combined sales of €237 million and underlying operating losses of €34 million.
“On a pro forma basis, sales for the five months ended December 31st, 2009 were €75 million and underlying operating losses were €5 million,” it added.
