Monday, December 9, 2019

Despite Simmering Row New Owners Found for Iconic Road Haulage and Logistics Brand

Multi Million Pound Cash Injection Makes Jobs Safe Over Christmas
Shipping News Feature

UK – The latest shenanigans at Stobart Logistics, a group rescued from imminent administration on Friday when the offer of a £55 million cash injection from main shareholder and former owner DBay Advisors was accepted by shareholders, underscores the complexity of a business which began life as a one truck outfit hauling fertiliser in the 1960’s, and which has grown inordinately ever since.

The ‘Payment in Kind’ loan of high interest bond finance (18% interest) leaves DBay back as majority shareholders (51%) in a financial deal similar to the controversial takeover of Manchester United by the Glazer family, which led to fans accusing the owners of stripping assets by initially taking interest but not paying down the loans. Eddie Stobart chief executive Sebastien Desreumaux said of the deal:

"The proposed transaction provides Eddie Stobart Logistics 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."

The company had announced a potential £12 million loss last month after previously admitting a £2 million ‘error’ in the 2018 results, leading to CEO Alex Laffey’s departure, and the suspension of trading in the firms shares in August.

The history of the company name over the past few years smacks more of television drama than reality, with two umbrella organisations currently trading under the name of the original founder. These are the recently rescued Stobart Logistics, the more public face and whose familiar liveried trucks are seen travelling daily on the country’s roads, and the Stobart Group.

The Stobart Group maintains a small holding of Stobart Logistics stock through its Stobart Investments subsidiary and also licences out the Eddie Stobart name to the Logistics group. Many will be familiar with the boardroom battles which occurred when then shareholding directors of the Stobart Group, former brothers in law Andrew Tinkler and William Stobart, disagreed over the future of their interests in a row that seemingly still festers.

The two men met as boys with Tinkler washing the family lorries and the friendship grew when they worked together in their own building company, WA Tinkler Developments, each marrying (and later divorcing) two sisters and going on to diverse interests until they became involved in the haulage business when the two, as WA Developments International, bought control of Eddie Stobart.

Disagreements over the firm’s future seem at the heart of their subsequent dispute, Tinkler as CEO of the Stobart Group, until dismissed by the board for alleged ‘breach of contract and breach of fiduciary duty’ (and he failed in a late bid to take over Stobart Logistics prior to the current bid acceptance), and William Stobart, initially as COO of the Group, leaving in 2014 to become executive chairman of Eddie Stobart Logistics until he departed in 2017.

The situation now becomes about as complicated as anyone could possibly wish, particularly as the two individuals seem still inextricably financially linked by mutual investments. The Stobart Group, unaffected by the latest deal with Douglas Bay Holdings (DBay) owns a plethora of businesses with divisions ranging across Energy, Aviation, Rail & Civil Engineering, Infrastructure as well as the aforementioned Investments. These hold interests in around seventeen subsidiary companies across the industrial spectrum.

Meanwhile Stobart Logistics has stuck mainly to areas around the core business, from ports to the Pallet Network with names like James Irlam & Sons and Stobart Rail Freight in the portfolio. The good news for the six and a half thousand or so employees of Stobart Logistics is that the latest tranche of investment will keep the wolf from the door at least over the Christmas period and the hope is, far beyond.

Suffice it to say that the Stobart name will doubtless see more controversy in the New Year as the new owners decide exactly where the future lies for what is with no doubt an iconic name in British freight history (or at least half of it).