Pubs tycoon Doyle takes £350k shot at gun making

Kevin Doyle owns a number of pubs including The Dome in Edinburgh. Picture: TSPL

Doyle’s Caledonian Heritable company is funding the expansion of a defence factory in Kent to enable it to make military rifles.

Caledonian Heritable holds a 23.1 per cent stake in Manroy, an Aim-listed defence contractor, which has supplied the Ministry of Defence for 26 years and which operates the Slade Green factory.

Under a loan agreement between the two companies revealed in a stock market filing, Doyle’s business is advancing £350,000 to Manroy as part of the £750,000 expansion move.

The money is due to be paid back by the end of November from the sales of the rifles to an existing customer.

The guns were planned to be manufactured in the United States, but the investment will enable them to be made entirely in the UK.

Manroy – which also designs and manufactures equipment including heavy machine guns, turrets for armoured fighting vehicles and weapon tripods and weapon mounting systems – said that it had already secured UK government export licences for the rifles.

Glyn Bottomley, Manroy’s chief executive, said: “This increase in production capacity, and its associated funding, are expected to produce significantly increased profitability on this contract than previously because major components will now be manufactured in-house rather than being sourced externally.”

Given Caledonian’s shareholding in the company, the loan agreement is considered to be a related party transaction under Aim’s rules. Manroy said that, having consulted with its nominated adviser, the board consider the terms of the transaction are fair and reasonable.

Manroy’s market capitalisation is around £14 million, valuing Caledonian Heritable’s stake at £3.22m.

In November its shares rose strongly after it said it was in preliminary takeover talks with companies including Belgium’s Herstal and Italy’s Beretta.

Shortly before Christmas, Manroy extended the bid deadline for the two to 14 February, by which time each must either announce a firm intention to make an offer for the company or walk away.

At the time, Manroy said it remained in active discussions with Herstal and that the talks with Beretta were not active but had not been terminated.

Leith-born Doyle began his working life as a builder before establishing his own business and going on to build up the 85-strong Coronation Inns pub chain, which he sold to Scottish & Newcastle before establishing Caledonian Heritable. The business now has wide-ranging interests across leisure, plant hire, haulage and property.

His company’s latest results for the year to 31 October 2012 show pre-tax profits fell to £2.05m from £5m, although turnover edged up to £39.5m from £39.1m. The directors said they were satisfied with the results in light of the economic climate.