UK aircraft manufacturer Britten-Norman is hopeful that a sweeping business restructuring combined with a fresh working capital injection from its new owners will enable a return to financial stability and allow it to target future growth.
Restructuring firm Interpath Advisory announced on 22 March that private equity firm 4D Capital Partners – using Britten-Norman Aerospace – had acquired the business and assets of five companies within the B-N Group via a pre-pack administration process.
Britten-Norman had been under pressure for some time as its struggled to service debts run up during the Covid-19 pandemic, eating into working capital and leading to monthly losses running at around £100,000-£200,000 ($126,000-$252,000), says chief executive William Hynett.
Its most recent accounts, for the 12 months ended 31 March 2022, show a loss of £3.6 million on turnover of £8.8 million; administrative expenses alone came to £7.8 million that year.
It was a situation that came to a head in late 2023, says Hynett, who is remaining with the revamped business.
“The pressure before Christmas was such that it wasn’t going to work out as complete trade through,” he says.
“We did look at a few options through the process… but in the end the only sensible outcome was the one we have gone for.”
While some debts have been written off through the five company administrations, Hynett says the business is working with suppliers to ensure “we are not leaving everybody fully in the lurch”. Employee liabilities have also been assumed by Britten-Norman Aerospace.
Hynett declines to disclose how much 4D Capital Partners paid for the trade and assets of the five businesses, or how much it intends to inject into the company.
Although the investment received is not a “life-changing” amount of money, Hynett says it is sufficient to ensure Britten-Norman can deliver its existing backlog – an orderbook of both new-build and refurbished aircraft that extends for around 12 months – and to have “safe, organic growth”.
“We have sufficient resources right now to deliver the first wave of new-build aircraft,” he says.
On top of the cash injection, 4D Capital Partners is also providing management and business turnaround experience: “It’s not just the money, it’s the expertise,” Hynett adds.
He sees the private equity business being involved with Britten-Norman for between two to five years, depending on how quickly its fortunes are revived.
“They have come in and set a specific growth target,” he says. “The idea is to turn this from a more or less £10-20 million-type business into a £30-50 million business.
“They understand that will take some time – manufacturing growth does not happen overnight.”
Prior to the turmoil, Britten-Norman had been working on a project to repatriate production of its BN2 Islander from its former partner in Romania and had opened a new final assembly line at Bembridge on the Isle of Wight, off England’s south coast.
Delivery of the first aircraft to come off the line – to the Falkland Islands Government Air Service – had been scheduled for May, but the upheaval experienced by the company means that target has been pushed out. Hynett says a handover in the second quarter is the “earliest” the company can now achieve.
“The last three months have been largely dead. We were moving pretty well until Christmas but we have been stuck in [the restructuring] process since then,” he adds.
Britten-Norman worked closely with the UK Civil Aviation Authority during the change to the new company to ensure the airframer’s design and production approvals, and type certificates, could transfer across.
The transactions have also seen the transfer to Britten-Norman Aerospace of all 117 staff across the group’s head office and manufacturing site, its hangars in Lee-on-Solent, the design and engineering office in Southampton and sales office in London.
B-N Group was previously controlled by Omani investor Alawi Zawawi and Hynett’s company Chewton Glen; both held 500,000 shares, worth a notional figure of £350,000.
But those shareholders have now been “wiped out” by the administration, says Hynett. “It has been quite a traumatic experience from my point of view – not just leading us through this, which has been hard, but also taking a personal loss.
“To have got through it was no mean feat, let’s put it that way.”
