Logistics group scraps plans to dispose of Black Country operation
Logistics group DX has scrapped plans to dispose of its hub in the Black Country following a review of its property portfolio.
The site in Willenhall was expected to become surplus to requirements when the company relocated to a new £35m super-hub at nearby Essington.
However, earlier this year South Staffordshire Council rejected plans for the new facility at the former Essington Brickworks site, off Hobnock Road, for a second time.
The facility was set to replace the Willenhall operation, which the group said had become unsuitable for current requirements.
However, the local authority rejected the scheme in March saying it represented inappropriate development – just as it had in the previous May.
In a statement to the markets today, DX said it had exchanged contracts with ChanceryGate (Livingston) to sell and leaseback certain freehold properties in a deal worth £4.5m.
The sites are at Thatcham, Basildon, Rotherham, Northampton (Kyoto Close) and Nottingham (Woolsthorpe Close).
The Willenhall site had initially been included in the package but the company said this proposal had now been scrapped following a rethink.
It said: “The board had initially included the freight and logistics hub at Willenhall in the portfolio for sale but, following discussions with the proposed directors, management and other stakeholders, it was considered that the Willenhall Hub was a site of potential strategic value to the company and it would be beneficial to retain the flexibility of continuing to hold the freehold.”
DX has been in discussions with major shareholder Gatemore Capital Management and HSBC, its bankers, with regard to financing options for the company’s transformation strategy.
The proceeds of the property deal and a £2m loan deal agreed with GCM Partners II, a fund controlled by Gatemore have been used to repay the company’s term loan with HSBC, which is the first step of an essential comprehensive refinancing of the business.
DX said it was currently in close and “constructive” discussions with certain key shareholders regarding its broader refinancing.
It said this was necessary because the board had identified a near term funding requirement, over and above the company’s existing resources, to address a working capital shortfall caused by reduced profits within the business.
The funding injection would also provide the company with investment to improve its performance.
Liad Meidar, CIO and managing partner at Gatemore, said: “The Gatemore loan has enabled the company to pay down HSBC’s term loan while retaining the freight hub in Willenhall. This gives the company greater financial and operational flexibility, setting the stage for the refinancing.
“We expect to roll our loan shortly into the new financing, positioning DX with a healthy balance sheet and a new start under proven leadership.”