(Sharecast News) - Infrastructure investor InfraStrata has acquired "substantially all" of the assets of Burntisland Fabrication, it announced on Friday, providing it with increased capacity across two sites in prime locations in Scotland.
The AIM-traded firm said consideration was £0.65m in cash, with a further deferred consideration of up to £0.2m in cash subject to the achievement of future revenue targets.
It said the facilities would trade under the Harland & Wolff brand, and represented the final fabrication piece of its UK footprint, positioning it to fully deliver on its existing strategy faster than it would have done with its two existing sites in Belfast and Appledore.
InfraStrata said more than 25,000 square metres of undercover fabrication capacity had been acquired, with 580,000 square metres of total site area and 24,000 tonnes of quayside load-out capabilities, and annual throughput tonnage potential estimated at more than 100,000 tonnes.
Waterfront sites were acquired that were capable of load in, load out and launching activities.
The sites are in close proximity to an array of wind farm projects currently ongoing and planned in the Irish Sea and North Sea, with "significant" fabrication capabilities added through the acquisition.
InfrasStrata said the acquisition would substantially increase its 'probability-to-win' rate, by offering clients multiple fabrication sites, with management estimating a reduction in major project fabrication timelines by as much as 30%.
The acquisition offered project developers a faster route to project monetisation and de-risking fabrication projects, by spreading work across three distinct but close-proximity geographies.
It said the acquisition was expected to accelerate Harland & Wolff's renewable market penetration by opening up projects previously at the planning stage before the Belfast site was acquired in December 2019, but were now ready to start tendering for fabrication works.
Assignment of long-term leases of 12 years at Methil and Arnish remained subject to the completion of due diligence and board approval of the respective landlords/
A memorandum of understanding had been entered into which set out the basis of future agreements which would be on no worse conditions than that of the previous tenant.
The assets acquired, and up to 29 existing employees, would come under the newly-formed Harland & Wolff Methil, a wholly-owned subsidiary of the company.
Those employees were currently on furlough, and would be brought back as required to re-establish operations at the sites.
Extensive consultation had been undertaken with key stakeholders who would look to use the facility going forward, InfraStrata said, including projects that were set to use the facilities prior to Bifab entering administration in late 2020.
"Whilst the total consideration is not material, relative to our balance sheet size and market cap, it nevertheless is a very important and highly strategic acquisition for InfraStrata," said chief executive officer John Wood.
"With this acquisition, we now have a footprint in Scotland, which is the hotbed for major wind farm projects as well as for shipbuilding programmes.
"We have now positioned ourselves strategically across the UK, with four sites capable of servicing our five core markets."
Wood said the acquisition gave the company the flexibility to optimise its operations across the group, and offer its clients the ability to fabricate faster and de-risk their exposure by offering multiple sites.
"As we move into larger contracts, it is crucial that we demonstrate the capacity to bid for and deliver on these projects.
"The acquisition of Bifab's assets delivers that capability to us and will open up a larger demographic of tender opportunities.
"Most importantly, it is expected to substantially boost our existing sales pipeline success rate given that the fabrication risk carried by the project developers will drop significantly since we will now be more favourably located geographically than others."
At 0852 GMT, shares in InfraStrata were down 0.26% at 39p.
11 Mar 2016 07:57