Eddie Stobart workers are at risk of becoming the latest victims of bandit capitalism if shareholders vote in favour of a controversial sale of Eddie Stobart Logistics (ESL) to venture capitalists tomorrow (6 December) at an emergency general meeting, Unite has warned.
Under the controversial plans, Isle of Man based venture capitalists Douglas Bay Capital (DBay) are being recommended by ESL’s board which will result in a purported £55 million cash injection in return for a 51 per cent controlling stake in the company.
However, a report commissioned by Unite, by consulting service Syndex, has revealed that rather than a cash injection of £55m, as little as £15m will be pumped into the business in the medium term because of fees and charges demanded by DBay and other lenders.
Unite national officer for road transport Adrian Jones said: “The findings of the Syndex report are deeply disturbing. This deal provides no certainty beyond the very short term for the workforce who are set to be the latest victims of ‘bandit capitalism’.”
In fact the cash injection will be considerably less than the £23.9m extracted from the company in the form of a dividend payment to shareholders just a few months ago. A payment that DBay, which already has a major shareholding, did not oppose.
‘Loaded down with debt’
In return, ESL will be loaded down with debt, making the company a prime candidate for being broken up and the profitable parts sold off.
Jone added, “DBay is involved in an elaborate game of smoke and mirrors. DBay, and the management of ESL are claiming that Stobart is at risk of imminent collapse but no one can make their own view as the company has not published any data on its cash position since the publication of the 2018 annual results.
“The DBay offer is clearly not as it seems and in reality a fraction of the £55m that is being touted will be pumped into the business long term. DBay’s investment will be primarily used to pay back the current lenders, the costs of the transaction and Dbay’s own fees.
“In fact, in the mid-term, the net cash injection from DBaywill be less than the money taken out of the business in dividends to shareholders earlier this year. A dividend payout that DBay as an existing major shareholder failed to oppose. The lenders have never formally warned that a rejection of the proposed deal would result in foreclosure.”
Jones said that Unite fears that if the deal is approved it will not be in the long-term interests of the workforce, a 1,000 of who are Unite members.
He said, “The levels of debts and increase in average costs of capital resulting from DBay’s offer will leave the company wide open to being sold off piece by piece in order to ensure DBay can record a rapid profit.
“Unite is urging shareholders to delay a decision and to actively encourage other bids to come forward. There is no reason why a long-term solution which meets the needs of the company’s workforce and customers cannot be achieved.”