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Dbay beefs up Eddie Stobart bid

The latest offer comes after former chief executive Andrew Tinkler said his TVFB group's offer was gaining traction from shareholders
November 29, 2019

Private equity group Dbay has increased its stake in Eddie Stobart (ESL) from 10 per cent to 27 per cent and changed its rescue plan for the group to include an intention to refinance the payment in kind (PIK) notes, allowing existing shareholders greater participation. 

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Eddie Stobart, whose shares were suspended in August after a review of its accounts, accepted a formal bid from private equity group Dbay earlier this month. The investor would take a 51 per cent majority ownership of the logistics group’s activities and inject £55m via a PIK loan facility. The loan would carry interest of 18 per cent. Shareholders will vote on the bid on 6 December.

Dbay's strengthened offer came after former chief executive Andrew Tinkler's company TVFB last week claimed its rescue package is gaining traction among Eddie Stobart's shareholders.

Mr Tinkler has yet to formally submit his interest as a rival offer. But shareholder response to the former CEO’s proposed £70m equity fundraising “has exceeded expectations”, TVFB says. It also claims that the vast majority of shareholders it has met with intend to vote against Dbay’s bid next week.

In response to TVFB's latest statement, Eddie Stobart cautioned that a failure to vote through Dbay's bid would present the business with "an imminent liquidity shortfall". It has secured a waiver from its lenders regarding its breaches of its credit facility, which would expire should Dbay's bid fail, the logistics company said. Eddie Stobart reiterated its recommendation to shareholders to back Dbay's package, which remains "the only concrete offer to date".

"The lenders have informed the board that if any alternative proposal requires additional funding in order to be implemented, the lenders would not be willing to provide this," it said, adding that the lenders had communicated this to TVFB. Lenders would instead support Eddie Stobart in its efforts to deliver Dbay's proposal by an alternative route which would see no return to shareholders", it warned. 

TVFB has denied that Eddie Stobart would experience a "liquidity issue within the next week," based on information made available to the company.