Buy-out offers on table for 'complacent' Mannway


<font color=red><b>MANNWAY FALLOUT:</b></font> Dozens show interest in buy-out, as management is blamed for complacency

Buy-out offers on table for 'complacent' Mannway
Buy-out offers on table for 'complacent' Mannway
By Jason Whittaker | October 22, 2009

More than 60 parties have expressed interest in buying failed logistics giant Mannway, as more details emerge of unpaid entitlements and management complacency.

All enquiries lodged have centred around buying the business as a whole, Ferrier Hogson partner Brendan Richards confirms to ATN.

Ferrier Hogson was appointed by lender GE Money last week to take over the national transport and warehousing operator, after CEO and majority owner Stuart Brown (pictured) surrendered to mounting debts.

Richards says the firm is "not into deep discussions with anyone", but the interest shown ahead of tomorrow’s deadline has been "very encouraging".

He wouldn't respond to the speculation over potential bidders as reported by ATN yesterday, but says a number of major industry players have expressed interest.

"People in the game are the people who would be the logical buyers for Mannway – representatives who would be a good strategic fit," he says.

Interested parties will spend a "couple of weeks" developing a formal offer, with receivers marking December 2-3 as a likely handover date.

SUBBIES WENT WITHOUT PAY
Richards confirms some sub-contractors, particularly in New South Wales, have gone without pay for up to 10 weeks. The company had also scrapped superannuation payments for employees.

Staff and contractors will have full entitlements paid if they can be transferred to a new owner, Richards says, but if assets are sold separately redundancies will be enforced and the Federal Government asked to meet entitlements.

"The issue is if we can’t sell the business we have to let people go," he says.

"The business doesn’t have the funds to settle those debts."

But Richards has praised staff and sub-contractors, saying their response to the situation has been "unbelievable" and "absolutely fantastic".

"It’s given us a lot of heart and enabled us to maintain strong relationships with customers," he says.

ATN reported on Monday that major clients One Steel and Bluescope were maintaining cartage contracts while the business continues to trade under receivership.

MANAGEMENT HAD 'FALSE SENSE OF SECURITY'
The collapse in the steel market is blamed for the demise of Mannway.

Richards says management leveraged the business and took on too much debt as steel prices boomed but failed to plan a "what-if scenario" for the bust.

Revenues effectively halved to $70 million annually as steel volumes plummeted. There was not enough work for drivers on the books, but the company didn't have the funds to pay redundancies.

"The key problem with the business is it had such a heavy alignment with the steel industry and therefore a heavy alignment with general economic conditions," Richards says.

"It lulled management into a false sense of security.

"At the end of the day good management is about having the foresight to see these things."

But Richards says the company still has "ripper assets" and is a viable business going forward after settling debt.

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