CHEVLER ON THE CASE FOLLOWING MBO

A specialist South Wales manufacturer of baking cases created only last month by a management buyout which secured 50 jobs is already planning its first £150,000 investment.

Chevler, based on the Tir Y Berth Industrial Estate, Hengoed, manufactures a range of plain and plain paper baking cases in some 600 shapes and sizes, supplying commercial bakers and distributors in the UK and elsewhere in Europe whose customers are high street supermarkets, coffee shops and high street bakers. The company also manufactures the premium Meat Saver Paper brand, which is used in the butchery trade to increase shelf life and improve point of sale presentation.

The company was born following an MBO of assets of Chevler Packaging Ltd by managing director Stuart Whelan, finance director David Anthony, sales & marketing director Mike Wescomb and manufacturing director Norman Chase.

The team was supported by professional advisers and chartered accountants Broomfield and Alexander, who prepared the business plan, and negotiated and arranged finance from a variety of sources, including Finance Wales plc, which provides commercial funding to businesses in Wales. Morgan Cole provided legal advice.

Chevler’s products are made to strict food hygiene industry certified standards from high quality Scandinavian natural greaseproof paper to contain raw ingredients which then go through the baking process to produce cakes and muffins.

A broad range of cutting and forming machines are used in the manufacturing process, and the new company’s first planned investment – a £150,000 bespoke machine - will enable them to produce significantly higher quantities of baking cases with no loss of quality.

The purchase reflects Chevler’s commitment to product innovation, quality of manufacture and customer service, developed by the management team in the old company. Before the buy-out, they had purchased 10 major new machines in three years, working directly with toolmakers to create bespoke machines and get new product lines up and running very quickly.

Formed in the 1920s, Chevler Packaging eventually grew into a £16m turnover employing 250 people at its peak in early 2000, manufacturing thermoplastic containers for sandwiches and salads in Bristol, cartons and cake boxes at a site in Buckinghamshire, as well as the open paper baking cases made at Hengoed.

Chevler Packaging have been on the Hengoed site since the early 1960s, boasting a skilled and loyal workforce.

But stiff competition together with crippling payments to an old pension scheme resulted in losses in recent years leading up to the administration. Pressure to meet increasing pension fund shortfalls meant Chevler Packaging could no longer operate in its current form, and the businesses was offered for sale at the end of last year.

The managers began to formulate their bid to purchase the assets of the company’s paper activities, and after the company went into administration last month, they beat off stiff competition to triumph with their bid.

“Our great strength is our new product development capability, and that is the secret to the success of this new company,” said Stuart. “We develop products either by bringing new ideas to the marketplace, or responding to demand and working with bakers to produce new types of baking cases.

“As Chevler Packaging, we developed a brand new presentation case for muffins which increased the sales of one leading UK coffee shop chain by 30%.

“We will be continuing to invest to make sure we stay ahead. Despite the problems which encumbered other parts of the Chevler Packaging group, the South Wales division maintained its position as the leading UK manufacturer of baking cases and we are now looking to exploit exciting opportunities in Europe and the USA. We have taken on an additional premises next door to the existing plant and this has increased floor space by 50% to facilitate our growth plans.

“We also have the ability to print in-house, which sets us apart from our competitors, and enables us to deliver fast and responsive solutions to customer demands.”

Broomfield and Alexander’s Corporate Finance Director Mark Hislop said: “It’s been very exciting to be involved in this fast-moving deal with such an experienced and committed management team. There’s no doubt their commitment to continued investment will keep this company at the forefront of their industry, and lead to some great opportunities ahead.”

Nick Larcombe, Investment Executive at Finance Wales, said: “The management team at Chevler needed to work fast to secure the business and working closely with them and their advisors we tailored a bespoke investment package that secured the management buy-out and 50 jobs. The investment will allow the company to develop new products and enter new markets and we’re looking forward to working with them in the future.”

The Morgan Cole team was headed by Corporate Partner Johnathan Rees, supported by solicitors Emily Plummer and Richard Jones. Mr Rees said: "Morgan Cole enjoys a strong working relationship with the financial advisers and funders to this deal, which undoubtedly aided the transaction process. Despite the economic downturn, this acquisition also proves that there are still many good deals and exciting business opportunities out there."

Photos and captions

Pictured in the Chevler factory on the Tir Y Berth Industrial Estate, Hengoed, are (left to right):

Photo 0001: Nick Larcombe, Finance Wales; Richard Jones, Morgan Cole; Mike Wescomb, Chevler; Mark Hislop, Broomfield and Alexander; Stuart Whelan, managing director, Chevler.

Photo 0004: Nick Larcombe, Finance Wales; Richard Jones, Morgan Cole; Stuart Whelan, managing director, Chevler; Mark Hislop, Broomfield and Alexander; Mike Wescomb, Chevler.

Photos 0008 and 0009: Stuart Whelan, managing director, Chevler; Mark Hislop, Broomfield and Alexander; Mike Wescomb, Chevler; Nick Larcombe, Finance Wales; Richard Jones, Morgan Cole.