Eimskip writes-off Innovate’s UK assets

During this process, it is anticipated that a key priority for Innovate will be to ensure minimal impact on its customer and supplier base. The Company’s strong customer base will be likely to prove very attractive and Analytiqa expects there to be several UK operators interested in acquiring Innovate as an ongoing concern, in a market where gaining market share outside of acquisitions is notoriously difficult.

Innovate operates 25 warehouses in 11 locations in the UK market. Eimskip invested in Innovate in 2006-2007 and is the sole owner of the Company. As part of Innovate’s strategy, the Company entered into long-term lease agreements for warehouses and transportation systems. However, recent market conditions have proved challenging, leading to lower than expected capacity utilisation of warehouse and transportation network assets. Furthermore, the Company´s lease and financial costs have significantly increased and the losses in recent months have weakened the Company’s financial position to such extent as to impact ongoing operations. Given the challenging economic outlook in the UK and following a detailed review by Eimskip’s Board of Directors in recent weeks, the Board chose not to increase Eimskip’s investment in Innovate and subsequently decided to write off Innovate’s assets and look for potential buyers.

In conjunction with the write-off and expected divestiture of Innovate´s assets, two of Eimskip’s Board Directors, Stephen Savage and Stephen Dargavel, who were also the prior owners of Innovate, have both stepped down from the Group´s Executive Board. Furthermore, Peter Osborne, which is also a prior owner of Innovate, stepped down from his position in February 2008. The Board believes that the assumptions made when Innovate was purchased have significantly changed and has decided to perform a detailed analysis on these assumptions and the investment process.