BiFab: intervention analysis

Overview of the Intervention

Overview

Established in 2001, BiFab is an engineering and manufacturing company based in Scotland. At the peak of its operations, BiFab operated three yards in Burntisland, Methil and Arnish.

The business originally focussed on the development of assets for oil and gas installations. In order to capitalise on the buoyant energy transition market in Scotland, the business targeted an entry into the renewables market in 2006. The company tendered for opportunities but was unable to position itself successfully in the market. In 2016 the business was put up for sale. BiFab engaged PwC as advisors and multiple parties noted interest. DF Barnes (and parent company JV Driver) were identified as preferred bidder and granted a period of exclusivity.

In 2017, BiFab secured contracts to support the development of the Beatrice Offshore Wind Farm (BOWL), the company’s first major renewable development. However, in the summer of 2017, the Managing Director (on whom there was significant reliance) suddenly passed away. To allow BiFab to focus on stabilising operations, the sale process was paused; however, following the loss of the Managing Director, the business’ financial and operational performance worsened. This eventually led in November 2017 to the Directors issuing a notice of intention (NoI) to appoint Administrators.

SG chose to intervene to prevent the business falling into administration. Over the following three years, SG provided a total of £52.4m across two distinct ‘phases’:

Pre-DF Barnes acquisition

SG initially agreed to provide a £15m working capital loan in November 2017 after BiFab Directors had issued an NoI to appoint administrators (‘Intervention Point 1’). This triggered a ten-day period during which the intervention had to be agreed, requiring SG and advisors to work at pace.

SG’s intervention sought to provide the required working capital to complete key contracts (the Beatrice contracts), supporting employment at the sites and ultimately securing the future of BiFab in Scotland through a trade sale to an interested bidder.

SG agreed to increase the working capital facility further in March and April 2018 (‘Intervention Points 2 & 3’), again with the aim of allowing the company to complete the Beatrice contracts and facilitate a sale to DF Barnes. These interventions increased SG’s lending to £51m, being a £41m working capital facility (of which £37.4m was drawn down by BiFab and converted to an equity stake of 32%) and a £10m restructuring loan. DF Barnes purchased BiFab in April 2018, and the Beatrice contracts were completed in May 2018.

Post-DF Barnes acquisition

DF Barnes’s business plans, which had assumed successful bids on two key projects (Moray East and Kincardine), ultimately proved not to be deliverable. While BiFab’s tender responses were competitive against European competitors, East Asian sites were markedly cheaper, which limited BiFab’s ability to compete and resulted in a deterioration of the financial position. DF Barnes, the majority shareholder, later chose not to adopt any further risk or exposure.

In May 2020, SG intervened again to increase working capital loan funding by £5m, to ensure short term solvency at BiFab while the company pursued a payment from a key customer. In September 2020, BiFab was again facing financial difficulty and lacked material future pipeline opportunities. At this stage the Directors chose to place BiFab into administration (‘Intervention Point 4’).

The timeline overleaf provides a detailed overview of the business’ activities over the intervention period from 2017 to 2021.