Case Studies

Environmental Liability Transfer – Hays Chemicals Ltd

If required by the vendor, BXB can deliver a full environmental liability transfer arrangement. Such an arrangment allows the current vendor to pass all on and off site, past, present and future environmental liabilities to BXB. This structure passes the information exclusion test and is layered with a bespoke ten year environmental insurance policy which covers clean up, bodily injury and property damage on and off site. Our structure was successfully used by Hays Chemicals Ltd.

Mergers and Acquisitions – Brenntag

In 2006 the private equity owners of Hays Chemicals Ltd had agreed an in principle sale of the company to the German chemical giant Brenntag. Included within the company portfolio was a 57-acre manufacturing complex in Cheshire.

Under the terms of the contract Brenntag would not accept any existing or historic environmental liability, both parties commissioned WSP and their initial remedial options estimated a remediation cost of between £5-25m.

Brenntag requested a reduction in the purchase price to reflect this environmental risk. An environmental remediation strategy, acceptable to both parties and an environmental deed, satisfying Brenntag’s lawyers, was attached to an insurance policy thereby indemnifying Brenntag from future liabilities.

The transaction was successfully completed at the orginal purchase price.

Profit Sharing Joint Venture – Brunnel Copper Works

The Brunel Copper Works in Cwmavon, Port Talbot was allocated within the Neath & Port Talbot local plan, however it had failed to come forward for development for over 15 years. This was due to the fact that the cost of a full site investigation and understanding the development constraints were seen as prohibitive to the landowner. With the abnormal development costs unknown, it was difficult for the landowner to understand the risk profile. In addition to this, a new technical advice note on flooding issued by the Welsh Assembly had blighted a significant area of the site, rendering residential development unviable.

By partnering with BXB, a remediation strategy, outline planning consent and abnormal cost schedule were delivered within 18 months, allowing the onward sale of the site to Barratt, South Wales. In addition, BXB demonstrated the site met the flooding criteria set out in the new technical advice, ensuring the footprint of the site was maximised. BXB’s expert advice and support resulted in the landowner securing a payment from Barratt £2 million in excess of their initial expectation.

Consultancy – Bluefield Sandbach Limited

In 2006, private investors incorporated Bluefield Sandbach Limited (BSL) to acquire the 57-acre, former Albion Chemical, site from Hays Chemicals (now called Brenntag).

The key terms of the deal, including a comprehensive environmental deed for the clean-up, consisted of the following:
• Sale and leaseback for a term of 3 years
• Existing use value paid for the land
• Monies placed in an escrow account for remediation of the site
• Working capital
• Negotiation of an environmental deed which secured the environmental ‘liability transfer’ to BSL and a charge in favour of Brenntag was registered at land registry which required BSL to seek the consent and approval of Brenntag if land was sold prior to statutory sign off
• Joint appointment of an environmental consultant to oversee the remediation process and authorise the drawdown of Escrow monies

In addition to this, BSL secured a bespoke environmental insurance policy cover of £5m via Chubb in favour of Brenntag for a period of 10 years. This
covered the following:
• Bodily injury
• Property damage
• Remediation costs resulting from a pollution incident

To date, under the guidance of BXB directors, BSL have successfully surrendered the following site-specific operational consents at Sandbach:
• Top tier COMAH Status
• Waste Management Licence
• IPPC Consent
• Hazardous substance consent

Planning permission was successfully secured for mixed-use planning permission for the whole site and, in July 2015, Taylor Wimpey completed the acquisition of 25 acres of land for residential development.

It is forecasted that this disposal will pay back the investors their initial investment and generate a profit in excess of the initial forecasts. BSL will retain circa 15 acres of development land, which is currently being promoted for residential development.