Asset manager DBAY Advisors has tabled a rescue proposal for Eddie Stobart Logistics (ESL), as shareholders await the release of half-year figures promised in September.
Shares in the stricken logistics business were suspended at 71p in August after a review of the group’s accounts, which prompted the departure of former chief executive Alex Laffey. In September, Eddie Stobart confirmed that DBAY had signalled interest in a possible offer for its operations, while in October logistics business Wincanton (WIN) announced that it was carrying out due diligence on Eddie Stobart.
Eddie Stobart confirmed that DBAY, which has just over a 10 per cent stake in the group, has proposed acquiring 51 per cent in a new entity that would become the holding company for Eddie Stobart’s operations. The company’s remaining shareholders would have a 49 per cent interest in the new entity. DBAY would also inject around £55m of financing into Eddie Stobart’s operations via a payment-in-kind loan instrument. DBAY had its deadline extended until 5 pm on 14 November to formally announce its proposal – this was extended by the Takeover Panel until 5pm on 14 November.
Wincanton has until 5pm on 15 November to announce its intentions. On the same day that Eddie Stobart confirmed DBAY’s proposal, Wincanton chief financial officer Tim Lawler told Investors Chronicle during a half-year results call that the group was continuing with its due diligence on Eddie Stobart. Eddie Stobart’s current auditor PwC has yet to sign off on its half-year results, “which obviously has implications for due diligence activities,” he observed.
A top-15 shareholder in Eddie Stobart, who asked not to be named, expressed their frustration at the delay in the approval of the company’s accounts.
“Without audited numbers, it’s very difficult for most investors to participate in any capital raise that is probably needed for the company,” they observed. “Debt has risen, they’ve been doing property deals, and we’re coming into a busy period where... working capital will be needed,” they said, adding that January and February usually pose a testing time for logistics companies, who are awaiting payment for prior work.
The shareholder would like to see Wincanton follow through on its interest, but acknowledged that this could prove challenging in the absence of audited accounts, blaming both Eddie Stobart’s previous and current auditors. “It’s difficult to create much tension in an auction if auditors can’t get out and produce the numbers,” they added. PwC could not be reached for comment, while a spokesperson for Eddie Stobart declined to comment.
