Directors make a fortune from ruins of Coloroll: Denby Pottery ready to go public in pounds 40m flotation
Monday 25 April 1994
Denby, which makes stoneware in Derbyshire, was bought by John Ashcroft's fast-expanding home furnishings group in 1987. Stephen Riley, the managing director, was hired from Reckitt and Colman, and said the company 'benefited enormously' from its new owner, which invested pounds 3m in it. By 1989 Coloroll was, however starting to interfere, insisting on adding its name to Denby's long-established brand.
Mr Riley proposed a buyout, which was rejected. But when Coloroll went into receivership in June 1990, he was able to revive the deal rapidly and the buyout, the first of seven from Coloroll, was completed the next month. The highly leveraged pounds 6m deal was structured to give Mr Riley and three other managers 55 per cent of the equity, while 3i held the rest.
'It was one of those things which seemed like a tough deal at the time,' Mr Riley said yesterday. Within six months of the buyout, Denby's big retail customers had frozen their orders, following a disastrous Christmas, and the company went on to four-day working. But customer demand for the fashionable product continued to grow. 'We've never caught up with demand again,' Mr Riley said.
Denby has invested pounds 7m since the buyout, turnover has increased from pounds 9.7m to pounds 20m, and the workforce has grown from 390 to 650. Pre-tax profit in the year to last September was pounds 2.76m.
The directors and 3i are likely to sell half their stake in the flotation, which will consist of a public offer and a placing. The flotation will raise pounds 10m to pay off debts and fund new investment. Denby's brokers are Societe Generale Strauss Turnbull.
Mr Riley said the company would continue to expand in the US, where it has sales of dollars 2m (pounds 1.4m), and there may be acquisitions in the medium term. But, he said, 'the Coloroll experience will make us a lot more cautious'.
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