Former Eddie Stobart (ESL) boss Andrew Tinkler has put together a proposal for the stricken logistics group through his company TVFB. Mr Tinkler’s plan was announced a day after competitor Wincanton (WIN) withdrew from the running to table a bid for Eddie Stobart.
Earlier this month, Eddie Stobart accepted an approach from private equity group DBAY Advisors that would see DBAY take a 51 per cent majority ownership of the logistics group’s activities and inject £55m via a PIK loan facility. The bidder then improved its bid, offering shareholders the opportunity to invest in up to 49 per cent of the PIK note.
DBAY currently has a stake of just over 10 per cent in Eddie Stobart, having doubled its position in the company in June. It described its offer as "a realistic chance" to safeguard jobs and protect shareholder value, adding that "it is vital that significant action is taken to rescue the company before the busy Christmas trading period".
Eddie Stobart's shares were suspended in August after a review of its accounts, and an external audit by PwC remains under way. Wincanton, which carried out due diligence on Eddie Stobart as it weighed up a merger of the two groups, announced the conclusion of its interest yesterday. It said that it “has yet to receive full disclosure of the information requested to enable it to complete its due diligence exercise”.
Wincanton highlighted Eddie Stobart’s recent warning on weak operating profits, poor cash collection and higher net debt, and has taken the view that a combination of the businesses would be insufficient to overcome “concerns with regards to Eddie Stobart's financial performance and ongoing liquidity”.
In response, Eddie Stobart said that it was disappointed that Wincanton had withdrawn from proceedings, despite having granted access to “extensive due diligence” and encouraged a bid from its competitor.
Eddie Stobart acknowledged interest from its former chief executive in September. Earlier this month, the Financial Times reported that Mr Tinkler was drawing up a £75m bid, which would be comprised of £40m of equity pledged by institutional investors, £25m from existing shareholders and £10m of his own money.
TVFB has now announced a package that would draw up to £70m from new investors and existing shareholders. The company “already has significant commitments towards the equity funding, including a significant amount to be provided by Andrew Tinkler”, it said. The funds would go towards deleveraging Eddie Stobart’s balance sheet and restoring its liquidity.
TVFB has submitted its plan to Eddie Stobart, but has not yet formally made an offer. The company is “confident that operating margins and growth can return to the levels last seen when Andrew Tinkler stepped down as CEO” in 2014.
The company dismissed DBAY’s offer, arguing that it “strongly believes that these proposals are not in the best interests of ESL shareholders”. Eddie Stobart and TVFB declined to comment in response to TVFB’s proposal.
