Business Weekly - Cambridge, UK

Petrochem Carless Ltd (PCL), one of the largest independent petrochemical manufacturers and distributors in Europe, has its largest facility in Harwich, where the MBO will safeguard around 100 jobs.

Led by chief executive, Paul Gemski, the management team took the opportunity to buy back the company from Fortis Bank, owner since 2002. PCL, which has a £150m turnover, will now look at expanding existing products within new markets, particularly Eastern Europe.

Gemski said: “As well as securing jobs and the immediate future of the firm, the MBO sends out a message to customers, the workforce and stakeholders that we believe in the long-term model for the firm. It is very good news to have our ownership back.

“2004 turned out to be a strong year for us and our new financing package provides us with a springboard for even greater success in 2005.

“We are now looking to grow, principally in our existing markets. We will not rule out acquisitions, but it is not really fundamental to our growth.”

The PCL product portfolio spans industry standard chemicals and solvents, from glycol ethers to alcohols, esters to ketones, and aromatic to aliphatic hydrocarbons. It is the leading European refiner and distributor of high performance speciality hydrocarbons, advanced automotive fluids and speciality chemicals.

The business was formed in 2000 following the merger of Petrochem UK and Carless Refining and Marketing. Of its four bases – Leatherhead, Scunthorpe, Antwerp and Harwich – Harwich is the largest and the heart of the company, home to Carless whose history stretches much further back to 1859 when a new volatile substance was brought to the UK market under the generic term ‘petrol.’

A direct descendant of that line, marked by Gemski for future growth, is high-performance racing fuel: “At the moment high-performance fluids are looking rather bullish for us and we are winning new work.

“High-performance fluids account for less than five per cent volume of our production, but bring back more than 10 per cent in profit. It is a line that we want to expand.

“We have supplied Formula 1 and pretty much all major automotive events in the UK such as the British Rally Championship and Touring Cars. Most the European oil majors and car manufacturers like Ford/Jaguar, Rolls Royce, Bentley and the MoD are also customers.”

A less glamourous, but higher volume product, is automotive coolant – anti-freeze – and to a lesser extent, screenwash. PCL is already the biggest provider of these in the UK and second largest in Europe. They also form the basis for PCL’s planned European expansion.

Gemski said: “There is a high demand for our coolants and screenwash in continental Europe and into the eastern markets like Poland and the Czech Republic. They have much higher regulation standards for the content of the screenwash which is ultimately washed off the roads by the rain.”

PCL is also “selling naphtha by the boatful to the commodity market,” says Gemski. “It has quite narrow margins but has potential for 2006 and 2007 as new gas fields open up.

“It has always been a very seasonal part of the company but with the interconnector going to continental Europe from the UK there should be a more consistent price.”

The refinancing was funded by Lloyds TSB Commercial Finance, which provided a £25m revolving credit facility, and by venture capital company 3i, which provided mezzanine finance.