Stobart workforce risk being latest victims of ‘bandit capitalism’; warns Unite
- Thursday 5 December 2019
Unite, the UK and Ireland’s union, is warning is that if shareholders vote in favour of a controversial sale of Eddie Stobart Logistics (ESL) to venture capitalists tomorrow (Friday 6 December) at an emergency general meeting, the workforce face becoming the latest victims of bandit capitalism.
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 £55 million that as a result of fees and charges demanded by DBay and Stobart’s lenders as little as £15 million will be pumped into the business in the medium term.
In fact the cash injection will be considerably less than the £23.9 million extracted from the company in the form of a dividend payment to shareholders just a few months ago. A payment, which DBay, which already has a major shareholding did not oppose.
Loaded 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.
Unite has around a 1,000 members at ESL.
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’.
“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 £55 million 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 DBay will 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.
“Unite fears that if the deal is approved it will not be in the long-term interests of the workforce. 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.”
Notes to editors:
For more information please contact Unite senior communications officer Barckley Sumner on 020 3371 2067 or 07802 329235.
Unite is Britain and Ireland’s largest union with members working across all sectors of the economy. The general secretary is Len McCluskey.