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Eddie Stobart’s holding company GreenWhiteStar Acquisitions (GWSA), which was sold to Culina Group last week, made a £15m loss last year and had net debts of £144.5m.

In its recently published financial results, for the year to 30 November 2020, the company revealed that it had gone some way to cutting both its losses and its debt burden, aided by a £65.3m debt for equity swap.

The results show that during the period its pre-tax loss reduced to £15m from a loss of £224.2m in the previous year, with turnover rising to £874m (2019: £857.5m).

In its strategic report to the results, GWSA also said that during the year it had reduced net debt by £77.2m to £144.5m, down from £221.7m in the prior year.

The lion’s share of the debt reduction was in the form of a £65m debt for equity swap involving Alpha Cassiopeiai, a finance house based in the Isle of Man, which shares the same London office address as GWSA’s then majority shareholder DBAY.

GWSA said the repayment of debt was underpinned by a successful strategy of refocusing the business on core competencies, including exiting some contracts, sectors and properties, reducing its shareholding in Speedy Freight and cutting costs.

GWSA’s latest results also show that interest paid on bank loans and overdrafts amounted to £9.4m in the period, up from £7.4m in 2019. In addition, the company also incurred £11m in costs in the DBAY rescue deal in November 2019.

However, despite these financial challenges, directors’ remuneration rose to £4.6m in 2020, up from £1.6m in 2019, with the highest paid director receiving £1m, up from £586,000 in 2019, according to the annual results. In the same period the company received £5.8m in furlough payments from the government.

Culina’s acquisition of GWSA, which owns Eddie Stobart, Eddie Stobart Europe, iForce, The Pallet Network, and The Logistics People, comes less than two years after equity house DBAY acquired a 51% stake in GWSA in a £75m bailout which saved the company from going into administration.

Industry experts hailed Culina’s purchase as a positive move, bringing much needed stability to Eddie Stobart.

Tom Coates, MD of HW Coates said: “The last few years have been a sorry saga for Eddie Stobart. Stable ownership under Culina will hopefully allow them to turn a corner. I do not think Greenwhitestar will be missed.”

Others said the sale had always been on the cards since the bail out deal by DBAY, as the company continued to be dogged by debt.

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One logistics director, who declined to be named, said: “This sale was inevitable. In this low margin industry to be loaded with that amount of debt and paying over 10% on your borrowings is a hiding to nothing.”

He added that he was surprised at the level of fees that had been taken out of the business, whilst at the same time taking almost £6m in furlough payments.

“Culina is a good business," he said. "It is well run and well organised so this acquisition has to be good news for employees.”

John Perry, MD of supply chain and logistics consultancy Scala, said the purchase was part of a wider consolidation trend in the sector.

He said: “This is a major development in the industry which has already seen a strong trend of consolidation and the growth of key major players. This acquisition means that Culina Group joins those major players and can support growth trajectory with the added workforce and infrastructure of the overall group.

“This comes at a time when the public have become increasingly aware of the importance of the supply chain and supports the view that logistics needs to be taken seriously with the right levels of investment and remuneration.

“Culina Group has an extremely positive reputation in the industry, and this acquisition means it can now further expand the range of its services and capabilities to its new and existing clients. This acquisition is particularly significant as it makes Culina Group the largest privately owned logistics provider in the UK.

“We should not necessarily expect fast change with this acquisition, but looking ahead into the future there will be opportunities for synergy which will in turn enable more efficient, end to end logistics operations that will benefit their clients.

“The joining of these two businesses demonstrates the value in collaboration across the sector; a trend we hope to see more of in the near future.”

Unite gave a qualified welcome to the deal this week. The union accused Eddie Stobart of opportunism in June last year when the operator announced sweeping staff cuts due to the Covid-19 pandemic.

Unite national officer for the logistics sector Adrian Jones said: “Our first priority is to ensure all jobs are secure and viable under the new ownership. We won’t tolerate any salami-slicing of pay and employment conditions.

“However, we would also hope that this would bring about a new era in industrial relations - and Unite is willing to play its part in constructing such a progressive framework.”

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