Tuesday, January 17, 2012

Property Acquisitions and Road Haulage Lay Offs at Stobart

Changing Face of Britain's Best Known Haulier
Shipping News Feature

UK – News from the multimodal logistics group Stobart Group this week resembles a big money game of Find the Lady. Today’s investor release tells of the acquisition of all the assets of the W.A. Developments International Group (WADI), the so called ‘Moneypenny’ portfolio. In line with recent Stobart transactions this one is far removed from the company’s freight and road haulage origins.

WADI is in fact a company controlled by Andrew Tinkler, Stobart’s CEO and main board director, and a company whose property portfolio has been sold to Stobart for a total consideration of £12.35 million, £5.15 million in cash with the remaining £7.20 million in exchange for new Stobart Ordinary Shares. WADI Properties is the holding company for Moneypenny, a tranche of eighteen freehold and long leasehold properties.

W.A.Developments it was who bought the Eddie Stobart Group in 2003 which later bought Carlisle Airport and, following the reverse takeover of Westbury Property in 2007 the Stobart Group has continued to diversify with projects like the development of Southend airport, Stobart Rail which is expanding its freight interests, and other projects like Stobart Biomass Products.

Unfortunately the split from the company’s core business has involved casualties as well as acquisitions, the refrigerated warehouses within which Stobart controls part of its chilled produce trade at Corby, Northamptonshire and Alcester, Warwickshire are slated to close with a new development at Magna Park, Lutterworth taking the business. The closures are bound to impact local warehouse staff and commercial drivers working on contracts for companies such as Tesco.

It is also ironic that the rapid expansion of its rail freight sector will undermine the very road haulage work from whence the company originally derived its enviable reputation for well turned out vehicles and drivers.There was no statement on the Corby closure which unions say threatens 150 jobs, but speaking of the Moneypenny deal Rodney Baker-Bates, non-executive chairman of Stobart, said today:

"This portfolio will both diversify and strengthen our existing property portfolio. We have the management capability within the Group to improve both the income and capital performance. It will provide positive cash flow, gives a return above our current cost of capital, and offers substantial capital upside potential. The transaction brings with it an attractive fixed rate debt package which will benefit the whole group up to 2017, as well as potential tax advantages given the current mix of earnings and assets."