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Robert.Jervis_43227 Nov 15

Deal struck for Eddie Stobart

Deal struck for Eddie Stobart image
Company update, offer update and £55m injection of new financing
Eddie Stobart Logistics plc has provided an update on its position following its announcement of 16 September 2019.

The preparation of the interim financial results (the “HY19 Interim Results”) for the six months to 31 May 2019 (“HY19”) remains ongoing, and the Group’s auditors are continuing their review.  Whilst information continues to be provided to the Group’s auditors, there is no certainty as to when the Company will be able to publish its HY19 Interim Results. In the meantime, the Company is today providing an update that it expects to recognise a number of adjustments in its HY19 Interim Results, and its previously reported Results.

The Board expects that the impact of these adjustments will now mean that EBIT for HY19 will represent a loss of not less than £12m, however Shareholders should note that losses could be higher.  In addition, this is subject to ongoing review by the Group’s auditors, which might give rise to material further adjustments.  The Board believes that the Group’s underlying operations have been trading profitably in the second half and the Board now expects EBIT for the full year of no more than £2m.

As a consequence of a reduction in EBIT, poor cash collection and the Company’s historical dividend policy, net debt for year-end FY19 is expected to be approximately £200m, which the Board considers to be an unsustainable level for the Group. The combination of these items has led the Board to consider numerous potential options, including a sale of the Company, to ensure the continued viability of the Company.

The Board of Eddie Stobart has also announced that it has entered into a conditional sale and purchase agreement (the “SPA”) with a wholly owned subsidiary of DouglasBay Capital III Fund LP (a fund managed by DBAY Advisors Limited) (the “Fund”) whereby:
  • the Fund will indirectly acquire a 51% stake Greenwhitestar Acquisitions Limited, which is currently a wholly-owned Subsidiary of the Company and in turn holds the Company’s interests in the trading entities of the Group; and
  • DBAY will agree to (directly or indirectly) inject approximately £55m of new financing into the Group’s operations through a PIK Facility, which will be used to provide necessary liquidity.
The Proposed Transaction is subject to a number of conditions including Shareholder Approval (including for the purposes of Rule 21.1 of the Takeover Code) at a General Meeting of the Company, which is anticipated to be held on or around 2 December 2019.  A Circular with further details of the Proposed Transaction will be sent to Shareholders in due course.

As a consequence of the Proposed Transaction, DBAY confirms that it does not intend to make an offer for the entire issued and to be issued share capital of Eddie Stobart pursuant to Rule 2.7 of the Takeover Code. This is a statement to which Rule 2.8 of the Takeover Code applies (see “–No intention to bid statement”).

Commenting on today’s announcement, Sébastien Desreumaux, CEO of Eddie Stobart said:

“We are undertaking a thorough review of the operations and, whilst this has highlighted a number of short-to-medium term challenges which the team and I are working determinedly to resolve, it has also reaffirmed my view that the Company, and its extensive operational capabilities and unique network, is anchored by strong underlying fundamentals with significant potential for the future. During the course of the year we have secured a number of customer wins and extensions, and in particular I am pleased to announce that our contract with Tesco has recently been renewed for a further 12 months up to March 2021. The Proposed Transaction announced today provides Eddie Stobart with the opportunity to move forward and look to deliver sustainable growth and profitability from a stable footing.”