Struggling GSE manufacturer Sovam’s assets have been acquired by finance giant Abbey and an expanded senior management team is now working towards a brighter future
On 5 July, it was confirmed that the Niort Commercial Court in western France had approved the sale of Sovam’s GSE assets to Abbey International Finance Group in a move that was effective immediately.
Parthenay, France-headquartered Sovam manufactures a range of what it describes as “smart, high-performance ground support equipment to civil and military aviation customers”. Its product range includes passenger equipment such as stairs and ambulifts, servicing equipment such as catering trucks and lavatory servicing units, tugs, aircraft maintenance lifts, belt loaders and freight loaders.
Putting innovation first, it says, Sovam offered the market the first all-glass passenger boarding bridge and the first catering vehicle to access the ultra-high A380 maindeck door sill, as well as the first Aerobus that delivers passengers from a departure lounge onto a remotely parked aircraft without them having to walk on the apron tarmac, to name but a few ‘firsts’. Nevertheless, the company had fallen on hard times of late due to a lack of liquidity.
Abbey is a privately owned finance group registered and based in Ireland. It provides niche financial solutions to a variety of business sectors and operates through three commercial divisions: leasing, insurance and private equity real estate. Founded in 1990, it has assets of over US$176 million and total equity of $137 million.
Tim Rane, who has been in the GSE business for many years and who is now president and CEO of the company, was approached by Sovam, which was looking for a new shareholder to rescue the company from administration. It needed a buyer that would have sufficient working capital to support the company’s existing purchase orders and invest in the long-term future.
Rane knew Sovam well, respecting the business as an innovator in the field of GSE provision, although it had come under some serious competitive pressures, particularly in French-speaking markets. He surveyed more than 20 Sovam customers, who unanimously agreed that the company should be saved, and who agreed with Rane’s own assessment that it is “a good company with good people and good products”.
He points out that Sovam has a huge factory of 7,000 sq m on a 43,000 sq m freehold site and has manufactured more than 10,000 items of GSE over its history, possibly half or more of which are still in operation. It has some “amazing products”, Rane continues, many of them bespoke to Sovam, tailored to suit some very specific customers needs. There were also potential opportunities in regard to synergies with Rane’s own rental business called AirGSE. “They just needed a shareholder who understood a GSE manufacturing company’s need for high working capital,” he says.
It was on this basis that Rane talked to his own financial backer, Abbey, about putting together an acquisition package. Knowing Abbey has experience of turning around French companies, has strong financial resources at its disposal and is “in it for the long term”, the match seemed an ideal one.
The end result was six weeks of intensive work as Abbey and Rane put together a proposed acquisition package – one of six bids for Sovam’s assets. The process ended with the decision made by the Niort Commercial Court in favour of the Abbey plan.
According to a statement from Abbey, its offer was chosen by the Court because “it demonstrated the best credible offer for the sustainability of Sovam’s business activities and employment”. Furthermore, Abbey adds, “The offer was supported by Sovam’s current employees and management team. The project, with the support of a reinforced management team, will ensure a successful turnaround, strengthening the company and ensuring its reliability and long-term sustainability.”
Pascal Yvernault has remained Sovam’s managing director. He insists that this is the time “to be positive and work together towards a stronger, brighter future with a better partner”. He describes this as a “new beginning” for the company.
Yvernault has been joined on the Sovam leadership team by Rane, plus three new non-executive directors from PLC backgrounds. Abbey suggests: “With over 25 years of experience in the aviation ground support equipment (GSE) sector, Tim will bring an undisputable expertise and renowned leadership to the newly revamped company.”
The main objective of the acquisition is being seen as returning Sovam to profitability, making use of Abbey’s liquidity as well as leveraging airGSE’s selling channels and rental and financing solutions. There are, the parties involved say, significant synergies to be exploited as the GSE sector follows other capital equipment industries where financing solutions are the enabler for growth, both for manufacturers and users of equipment.
Abbey believes that Sovam has both “a sustainable future and growth potential which it will unlock by putting customers first and enhancing their operational capability.
“Sovam’s brand is strong, its product reputation is excellent and its employees have a very good knowledge base,” it insists.
John Prosser, Abbey’s managing director, comments: “We strongly believe that this great historical French jewel, and all of its employees, can once again deliver great value to customers around the world, which will give continuity for the great Sovam brand. It is a most welcome addition to Abbey’s portfolio.”
Rane explains: “Sovam is an iconic brand, earning its rightful place in the industry hall of fame being a valid competitor to the other GSE manufacturers, which customers are very keen to maintain. Sovam will continue to launch new innovative products and deliver these to an enlarged customer base. We will also access the GSE rental market by offering tailor-made financial solutions for Sovam products.”
Future strategy
The strategy for Sovam going forward, as outlined in a presentation dating from mid-July, involves:
• Rebuilding manufacturing capability and preparing for sales growth
• Restoring confidence among longstanding customers who have shown “tremendous patience”
• Leveraging skills and experience in order to provide growth opportunities in new markets
• Aggressively using special financing solutions to boost sales
• Developing a strong rental product which is compliant with new upcoming off balance sheet finance legislation
• Accessing global ground handlers and freight companies to generate volume orders
Sovam maintains that the workforce is “part of the solution”, and the company is engaging with all employees, encouraging them to give suggestions for how the business can be improved, while also focusing on customer needs.
The plan is to showcase Sovam and some of its GSE at the Munich inter airport exhibition in October this year, presenting a vision for the future without forgetting a long and – up until recent harder times – very successful past.
