The UK operation of a European cleaning products company

The issue

This organisation consisted of a syndicate of banks providing finance to a management buy-in of a cleaning products manufacturing operation. The new management team had prior experience of environmental issues complicating an earlier deal and were concerned about understanding whether the same could apply in this case.

Our approach

PwC managed an EHS due diligence exercise. We undertook a programme of "Phase 1" visits across the portfolio and identified four sites where the bulk storage of chlorinated solvents presented a potential contamination risk. Although there was no direct evidence that contamination had occurred, the location of several sites over sensitive groundwater resources increased the magnitude of the risk.

PwC presented the client with a range of possible solutions, including:

  • Further technical investigations; and

  • Warranties and indemnities or the possibility of a risk-transfer solution involving insurance.
The client was eager to pursue the insurance option. PwC identified a number of providers for consideration and undertook preliminary discussions with them on behalf of the client.

The outcome

The result was that the client obtained a bespoke insurance solution for the 10-site portfolio, providing coverage for both historical and future pollution events, for a five-year period and a one-off premium. Effectively the potentially large but unknown risk was removed as a deal uncertainty by the insurance purchase.