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Eddie Stobart Logistics plc (Eddie Stobart) has recently been in the spotlight, having been the subject of a financial scandal, the centre of competing takeover bids and teetering on the brink of administration.
The company issued a statement on 13 November 2019 on the proposed offer by DBAY Advisors Limited (DBAY) following a story by Sky News that contained details of DBAY’s possible offer. The PUSU for DBAY (at the time of writing) is 5:00pm on 14 November 2019.
Under the terms of the offer, Eddie Stobart would become owned by a holding company majority owned (roughly 51%) by Douglas Bay Capital III Fund LP, a fund managed by DBAY. The remaining 49% shares would be owned by other existing shareholders of the company. This proposal would see around £55 million of financing injected into the company via a Payment in Kind (PIK) loan instrument.
Eddie Stobart made clear that this proposal was still being considered and that it would require approval at a general meeting if it was accepted.
The proposal, were it to be accepted, would be controversial because DBAY was the majority shareholder when Eddie Stobart listed in 2017 and received a big pay-out when it did sell its stake at the time. It is now proposing a deal which would effectively make it more difficult for independent, minority shareholders to exercise any influence over the company’s governance, finances or operations. A further complication for the deal is that it would require the approval of the company’s creditors. It was previously reported that Eddie Stobart’s creditors had instructed Alvarez & Marsal to advise on a potential restructuring of the company’s debt facilities, while Eddie Stobart had brought in Deloitte and Rothschild. Eddie Stobart is reportedly on the brink of administration and therefore needs the banks to support a rescue deal.
Trading in Eddie Stobart shares were suspended in August when the value of a share dropped to 71p following the accountancy scandal. This share value gives the company a market value of £268.1 million and with a net debt of approximately £160 million, which is a large climbdown from when the AIM company debuted on the London Stock Exchange at 150p a share in 2017 with a market capitalisation of £392 million. The company has been in trouble since it was affected by an accounting scandal and the sudden departure of its CEO. See more here
Andrew Tinkler, the former Stobart Group plc boss who had earlier withdrawn a bid for Eddie Stobart, is said to be considering a refinancing alternative to the one proposed by DBAY. For more information about Mr Tinkler’s interest in Eddie Stobart and his connection to the wider Stobart group, see here
Meanwhile, Wincanton plc, the British Logistics company that had announced a possible merger of the companies, has until 5:00 pm this Friday (15 November 2019) to make a firm offer for Eddie Stobart.
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