MANAGEMENT buy out at Estuary Fuels has been completed in a deal which values the company at between £2.9 million and £3.2 million. Estuary management, ICC Venture Capital and the Dutch company Sea Bunkering have combined to buy the company from Statoil.

Estuary managing director, Mr Tim O'Donoghue and director Mr Gerry O'Mahony, will own about 38 per cent of the company. The balance of the Limerick based operation will be held equally by ICC Venture Capital and Sea Bunkering.

Estuary Fuel, which was acquired by Statoil when it bought Aran Energy, is an important oil distributor in the south west.

As well as distributing heavy fuel oil, diesel and kerosene to industrial and agricultural customers and home heating oil, Estuary owns about 50 petrol stations mainly in the south west region. It has an annual turnover of about £26 million and, while the business is profitable, it is understood to operate on very low margins. Annual profits are understood to be about £500,000.

Following Statoil's acquisition of Aran, the Norwegian state owned company made a bid for Conoco which trades as Jet. That bid was referred to the Competition Authority.

The Authority recommended that the deal should not go ahead because it would result in the removal of a low cost operator from the market. Statoil initiated proceedings in the High Court to challenge the ruling. However, following an offer for a number of Jet outlets from rival Maxol, a new proposal was put forward. This entailed Maxol buying 80 of the Jet stations for an undisclosed sum and the Statoil acquisition of Conoco then went ahead. As part of the arrangement, Statoil put Estuary on the market.

Estuary management were represented by Corporate Finance Ireland in the deal which included refinancing existing debt. The equity investment in the deal is understood to be about £1.5 million.

In addition to the £2.9 million to £3.2 million involved, new working capital facilities were put in place with National Irish Bank. Sources said the new owners have put "a very prudent financial structure in place".

Sea Bunkering is a Dutch fuel broker and oil refiner owned by North Sea Holdings. The company was identified as a suitable investor by Estuary management which wanted an industry partner.