Last minute deal prevents famous haulage firm falling into administration

In a crunch meeting today (December 6, 2019)  in which the media were excluded shareholders of Eddie Stobart Logistics (ESL) voted to accept a £55m takeover deal from private equity firm DBAY Advisors.

The Isle of Man firm beat off a rival £80m bid by former ESL group CEO Andrew Tinckler with his 6.5% of the firm after they were given the backing of William Stobart, the fourth son of the founder of the firm Eddie which saved the firm from administration.

Writing on Motor Transport magazine’s website Tim Wallace said: “DBAY will take control of ESL's assets in a £55m bailout backed by William Stobart, fourth child of its founder Eddie, in a deal that gives it an eleventh-hour reprieve following reports that accountancy firm Deloitte had been lined up to prepare it for insolvency.

“The deal, which sees DBAY take a 51% stake in the company, marks a victory for William Stobart over former ESL group CEO Andrew Tinkler, who had made a rival £80m bid and recently purchased a 6.5% stake in the company.”

If the deal had not been approved the banks AIB, BNP Paribas, Bank of Ireland and KBC were poised to call in their loans. So in effect the shareholders had no choice while DBAY Advisors will charge ESL an interest rate of 18%.

Tim Wallace commented that this will give DBAY a stronger claim to any ESL profits, as debts are paid before shareholders see any payments. Others on social media have described the situation as a sad day for a famous name bought by ‘asset strippers.’

The BBC described the loan as a “so-called payment-in-kind (PIK) loan, an unusual type of borrowing which last came to public prominence during the controversial takeover of Manchester United by the Glazer family.”

The BBC’s Katie Prescott said: “The high-interest loan offered by DBay and shareholders seeing their ownership diluted are not easy pills to swallow. But there's relief, at least in the short-term, for the 6,500 Eddie Stobart staff and many more workers in their supply chain in the run up to Christmas.”

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