Reprieve for 120 staff as Future taken over by rival

A COLLAPSED Renfrewshire environmental services company has been taken over by a Bathgate-based rival, saving more than 100 jobs, just a week after a private equity firm ploughed £20 million into the latter.

Euro Environmental Group (EEG) has acquired parts of Future Environmental Services, based at Inchinnan, near Glasgow, for an undisclosed sum – saving 120 jobs from its 210-strong workforce.

Sovereign Capital, the British private equity "buy and build" specialist, funded the management buy-out of EEG, a provider of drain and sewer cleaning, inspection and repair services, earlier this month. It committed 20m to fund a buying spree at EEG.

Future Environmental – EEG's first acquisition – also provides drainage and consultancy services to corporate clients, local authorities and water utilities, but was forced to call in administrators on 1 March.

Paul Dounis, a restructuring partner at Begbies Traynor, the administrator, said: "The straw that broke the camel's back was the bad winter weather in Scotland, which led to cash flow problems."

The deal will double EEG's turnover, turning it into the UK's largest provider of drain and sewer cleaning, inspection, surveying and repair services by market share. Its main competitors are Lanes for Drains, based in Leeds, and Waterflow, of Colnbrook, Berkshire.

Following the acquisition, EEG boasts 330 workers at 12 sites , and 250 specialist vehicles that can perform everything from cleaning small pipes in urban areas to major de-silting operations.

Rod Spinks, chief executive of EEG, said: "In less than one week since we were backed by Sovereign, we are delighted to have achieved immediate critical mass in our growing market.

"We're excited by the prospect of working with Sovereign to grow the business, both organically and through acquisition, into a truly national provider."

Britain's predominantly Victorian sewage infrastructure requires ongoing maintenance, typically outsourced on three to five year contracts.

Andrew Hayden, managing partner at Sovereign, said: "Future and EEG now have the opportunity to cross-sell their capabilities amongst their diverse customer base and benefit from the scale of the combined group. We will support management to further grow the business."

Royal Bank of Scotland has provided debt funding to support Sovereign's aspirations within the sector.

Alan McCaskie, director of structured finance at RBS, said: "In Sovereign Capital, EEG has a financial sponsor with a demonstrable track record in buy and build strategies and RBS looks forward to assisting the management team and Sovereign in delivering its growth plan."

TMG Corporate Finance and KPMG, the accountancy giant, advised Sovereign on the deal.