Eddie Stobart saved from collapse after crunch vote

Eddie Stobart saved from collapse after crunch vote
By: WNG BBC Posted On: December 06, 2019 View: 121

Eddie Stobart saved from collapse after crunch vote

Eddie Stobart shareholders have approved a rescue plan for the truck company, staving off possible collapse.

One of the firm's largest shareholders, DBay Advisors, will lend it £55m through high-interest bonds and assume control of the haulier.

Shareholders voted "overwhelmingly" for the deal, the company said.

It means the company will avoid breaking its banking agreements and will not face administration.

Under the plan, in return for the £55m loan DBay will increase its stake in Eddie Stobart Logistics to 51%, but will charge the company an interest rate of 18% for the loan.

This will hand DBay control of the haulier as well as a stronger claim to any money it makes, as debts are paid before shareholders see any payments.

The loan is a so-called payment-in-kind (PIK) loan, an unusual type of borrowing which last came to public prominence during the controversial takeover of Manchester United by the Glazer family.

They were also partly blamed for the 2012 collapse of retailer Peacocks.

Eddie Stobart chief executive Sebastien Desreumaux said: "The proposed transaction provides Eddie Stobart with the opportunity to move forward and look to deliver sustainable growth and profitability from a stable footing.

"Our main priority and focus is now continuing to deliver the high levels of services expected by our customers as we move into the busy Christmas period."

Share suspension

Late last month, rival haulier Wincanton decided not to bid after reviewing Eddie Stobart's finances.

A firm backed by former boss Andrew Tinkler also made an offer involving a sale of new shares to cut the company's debts.

However, Eddie Stobart said only DBay's proposal had the support of the firm's banks.

Eddie Stobart said last month it expected to report a loss of at least £12m for the first half of the year.

Trading in the company's shares has been suspended since August when it announced that its then chief executive, Alex Laffey, would stand down.

The transport company - famed for its distinctive green and red lorries - had revealed a £2m error in its 2018 results.

The company was founded by Eddie Stobart in 1970 before its expansion was driven by his second son, Edward.

Read this on WNG BBC
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