Geldards advise the Development Bank of Wales on £1.2 million investment to grow Pontyclun printing specialists

Geldards’ Corporate team has successfully advised the Development Bank of Wales on a £1.2 million investment in Pontyclun-based printing specialist business Reel Label Solutions, to fund a shareholder restructure and provide funding for capex investment as the company embarks on a programme of growth.

*Photo granted under licence from the Development Bank of Wales and not for commercial use.

Reel Label Solutions was first established in 2002 by founding Directors Jonathan Wright, Paul Prothero and Chris Duffin. The investment of £1.2 million is a mixture of debt and equity from the Development Bank with former Sales Director Jonathan Wright becoming the majority shareholder and Managing Director following the exit of Paul Prothero and partial exit of Chris Duffin.

As specialist printers in the pharmaceutical sector, Reel Label Solutions had been approached in relation to a trade sale but wanted  to pursue a shareholder buy-out instead to avoid any potential relocation from South Wales. Based on Cambrian Industrial Estate , the company employs 27 and specialises in high-quality digital labels, in particular short-run production of digital adhesive labels and flexographic label printing.

Managing Director Jonathan Wright explained:

“Chris, Paul and I have worked tirelessly over the last 20 years to build the business. We’ve got a very loyal and hardworking team who have played a significant role in helping us to get to where we are today.
 
We’ve always been mindful of the need to think long-term about our succession planning. We had the opportunity to proceed with a trade sale but none of us were comfortable with what this might have meant for the team. That’s why we turned to the Development Bank of Wales – we wanted to understand our options and do what was right for us as individuals and the business as a whole. In turn, they’ve structured a deal with a mix of debt and equity  that works for all shareholders and creates a sustainable future for the entire team here in Pontyclun.
 
Our focus is now on maximising efficiency and developing opportunities in existing and new markets. This is going to require investment in new equipment so the loan from the Development Bank gives us the extra capital required as we focus on growing the business over the coming years.”

The investment by the Development Bank of Wales was structured by Deputy Fund Manager Joanna Thomas and Investment Executive Scott Hughes. They said:

“Jonathan, Chris and Paul have built a robust and sustainable business that is on target to achieve a turnover of £3.5 million this year. With unrivalled experience in the packaging printing industry and a reputation for being able to deliver high quality labelling, there is capacity for further growth and the creation of more jobs over the coming months.
 
There are many different ways to plan for succession and fund exit strategies. In this case, we’ve been able to retain ownership of Reel Label Solutions in Wales; helping Jonathan to take over the reins and keeping the business local. Importantly, we have given the business additional headroom for future growth by enabling them to invest in new equipment and machinery.”

Geldards advised the Development Bank of Wales. Chris Thomas of SME Finance Partners acted for Reel Label Solutions. JCP Solicitors acted for Jonathan Wright and Chris Duffin. The funding for the deal came from the Wales Management Succession Fund and the Wales Business Fund.

The £204 million Wales Business Fund is financed by the European Regional Development Fund and the Welsh Government. Loans, mezzanine finance, and equity investments are available for deals between £50,000 and £2 million with terms ranging from one to seven years for small and medium-sized businesses (those with fewer than 250 employees) based in Wales, or willing to relocate to Wales.

The Wales Management Succession Fund is financed by the Welsh Government and Clwyd Pension Fund. The £25 million fund provides loan and equity investments between £500,000 and £3 million with terms ranging from one to seven years.

Alex Butler, Geldards Partner in the Corporate team in Cardiff led the advice to the Development Bank of Wales.

Commenting on the deal, Alex Butler said:

“We were pleased to advise Joanna, Scott and the team at the Development Bank of Wales on another successful investment from its management succession fund. It’s great to see the Development Bank’s continued support for succession planning in Welsh businesses. The investment in Reel Label Solutions gives the business a great opportunity to grow and build on the hard work already put in by the existing management team.  We wish them every success for the future.”