Leading Banks Back EnerMech Expansion With £90 Million Funding Package

Two leading banks have joined with original lender Bank of Scotland to provide a £90 million funding package for oil and gas engineering group EnerMech.

EnerMech said the addition of Norwegian bank DNB and HSBC to form a ‘banking club’ reflected the requirements of a company which in five years has established a global footprint of more than 30 locations and has grown its workforce to over 1800.

The extra funds will be used to invest in new equipment, additional facilities and in expanding the workforce as EnerMech continues a growth strategy which will see revenues rise to £280 million in 2014 and the total number of employees increase by 700 to 2500.

An estimated 220 new jobs will be created in the UK with the majority in Aberdeen and the remainder in Great Yarmouth and Bristol. EnerMech will put a strong focus on expansion in the Asia Pacific region with 350 new posts, while the Middle East/Caspian count will rise by 90 and Africa and Norway by 50 and 20 respectively.

The international reach of the banking club will allow Aberdeen-based EnerMech to consolidate its overseas banking arrangements. Bank of Scotland will remain the lead bank and has refinanced a £60 million package as part of the new arrangement.

The funding arrangement follows an increased investment earlier this year by private equity specialist Lime Rock Partners which supported the acquisitions of Vicon Services in Australia and UK-based Total Reclaim Systems.

To date EnerMech has invested £30 million on acquisitions and £80 million on organic growth and has put aside a further £15 million for future acquisitions.

EnerMech finance director, Michael Buchan, said: “The size and international reach of our operation means we have now outgrown a single bank. By establishing a banking club we have a dual advantage of pooling the funds necessary to facilitate our projected growth and can also call on a wealth of global financing expertise.

“We have been very happy with the support and service from Bank of Scotland who have been involved since the company was first established in 2008 and we are delighted they remain on board as our lead agent bank.

“This investment and the continued support or our original equity partner, Lime Rock, demonstrates the increased financial strength of EnerMech as it continues to grow both in the UK and international oil and gas sectors.”

Andrew Robertson, Relationship Director at Bank of Scotland, said: “We are delighted to continue supporting the team at EnerMech with an increased funding package as part of their ongoing international growth plans.”

Wendy Keenan, Vice President, DNB Bank ASA, said: “We are pleased to be given the opportunity to support EnerMech and help management fulfil their plans for expansion.”

Keith Robertson, Leveraged Finance Manger of HSBC in Aberdeen, said: “HSBC welcomes the opportunity to support the next phase of development for this international oilfield services company, which has already demonstrated a highly impressive track record of growth. EnerMech has a market leading suite of products and services, a proven high calibre management team and international operations which are well aligned with HSBC’s global footprint.”

Simmons & Company advised EnerMech on the refinancing package with legal support from Burness Paull. Legal advice to the banking club was provided by Blackwood Partners with financial due diligence undertaken by KPMG.