Eddie Stobart Logistics (ESL) will see lenders pull out and face an “imminent liquidity shortfall” if shareholders reject DBAY Advisors’ takeover bid, DBAY warned this week.
The warning follows reports that advisers to Andrew Tinkler, the former Eddie Stobart Logistics chief executive, are preparing to lodge a formal appeal with the Takeover Panel aimed at preventing DBAY Advisers from voting in favour of its own rescue bid.
The appeal will be lodged with the mergers watchdog ahead of the shareholder vote on Friday (6 December 2019).
DBAY is proposing to inject £55m into the business in exchange for a majority ownership. Tinkler’s company TVFB has submitted a rival proposal for ESL which involves an equity fundraising from new investors and existing ESL shareholders of up to £70m.
In a Stock Exchange announcement today (2 December 2019) DBAY Advisors said: “Other parties who have been considering alternative solutions have been unable/unwilling to submit any concrete workable alternative so far.
“Should the DBAY proposal be voted down, the Eddie Stobart board will be faced with an imminent liquidity shortfall, imminent expiry of the existing waivers from the Lenders relating to the breaches of the Company's credit facility and no support from the Lenders to explore alternative options.”
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DBAY, which holds almost 30% of shares in the company in concert with William Stobart, added that it had spent "months" working on a proposal which it said provides "a realistic opportunity to save the equity value in Eddie Stobart, while safeguarding jobs."
It continued: "DBAY has a long and successful history with the business and it is with regret that we will be returning under these circumstances.
"Our belief in Eddie Stobart is reflected in the considerable effort we have put in to deliver a practical proposal and our decision to invest further, despite the problems it has faced since we stepped back from the board.
"We think that Eddie Stobart staff are the best in the industry; we'll match their enthusiasm for this business and together overcome the company's recent problems.
"We want customers to rest assured that our immediate priority is to ensure that they receive the reliable, high-quality service expected of this great brand. Key to all this will be the excellent partnerships Eddie Stobart has developed with its suppliers, who we know will play an important role in restoring the business.
"With the new funding in place to stabilise the business, we believe the company can thrive once again. This belief is underpinned by the return of William Stobart who will support the operational management teams. This stability will be important to provide excellent customer service through the Christmas period and will allow the company to meet its commitments to customers and suppliers throughout this busy period."
