Forgemasters' chief hits back at coalition claims over loan

The manufacturing company wanted the money to help finance a 140m project to put it at the top of the supply chain for the next generation of nuclear power stations here and overseas.

But after the coalition axed the loan, Prime Minister David Cameron told opposition MPs to look at the company's shareholder structure and "see who was really going to benefit from that not very thought through piece of financial engineering".

Deputy Prime Minister Nick Clegg said Forgemasters only sought the public funding because bank terms were not good enough and "because they did not want to dilute their own shareholdings in the company".

In a letter to the Yorkshire Post, Graham Honeyman defended his company's bid for public funding and said he took personal risks to secure its future when the business faced collapse several years ago.

He said: "I stepped in, when no external bids for the company were on the table and borrowed all my share money to make the (2005) management buyout happen, which is why I am the major shareholder at Sheffield Forgemasters.

"I have helped create a secure future for this company, having risked my own personal situation to make it happen. My priority has always been with this special company, its workforce and its future."

Dr Honeyman said management and employees now own 100 per cent of the shares, which he described as a crucial milestone and the future vision of the organisation.

He said the 140m package was to involve a substantial injection of private equity money which would have significantly diluted the existing shareholding.

Dr Honeyman added: "Everything that we have done since the MBO, including reinvesting every penny of profit, has been done with long term aims in mind."

He said the company continues to trade profitably and remains unaffected by the government decision on an operational level.

Letters to the Editor: Page 12.