MANNWAY LATEST: Transport giant in debt to GE and DaimlerChysler; will be dismantled and sold within weeks
By Jason Whittaker | October 15, 2009
Mannway fell behind repaying lenders GE Money and DaimlerChysler, which will see the bankrupt logistics giant change hands and possibly dismantled within weeks.
The privately-owned carrier fell into receivership yesterday afternoon, blaming the economic climate for a collapse among the biggest seen in the transport sector.
More details are emerging from receivers, including the loss of a major contract and the impact of a significant downturn in the steel market, which has been a specialty of the Melbourne-based group.
GE Money, as the primary secured lender, sent receivers Ferrier Hodgson into the business yesterday. The firm will continue managing operations while preparing for a sale.
Mannway CEO and part-owner Stuart Brown had earlier appointed his own receiver, realising the company could not continue to operate.
“He came to a point where he recognised there wasn’t financial capacity for the business to trade,” Ferrier Hodgson partner Brendan Richards tells ATN.
Receivers will begin going through the books today, with Richards saying it is “a little bit early to flesh out detail”.
But he says it’s “fair to say turnover declined over recent history”.
Only a few weeks ago, as part of SupplyChain Review’s annual survey of logistics providers, the company reported annual revenue of $140 million. But Ferrier Hodgson estimates turnover of just $70 million.
The company had told SupplyChain Review: “Freight volumes of some customers has reduced but this has been compensated by aggressive marketing and securing new customers.”
A spokesperson for GE deferred questions to Ferrier Hodgson, but says it had been working with Mannway for “quite a while” to sure up finances before having to send in receivers.
DaimlerChysler has not appointed a representative in the wind-up of the company.
Richards says Mannway lost a significant contract with Bunnings at the start of the year which hit the business hard.
Its investment in the declining steel market, working with customers including OneSteel and Bluescope, also contributed to the profit downturn, Richards says.
In 2007 the company purchased Port Kembla-based steel carrier Tex Transport, the same year it also acquired Dove Transport and Storage and RSP Transport to form a new intermodal division out of Melbourne.
DOES MANNWAY HAVE A FUTURE?
Advertisements for the sale of the business will be placed in newspapers as early as tomorrow.
Richards says the first priority of the firm is to review operations and “make changes internally”.
The sale will effectively involve the assets, contracts and intellectual property only.
Receivers will look for a buyer for the whole business to protect jobs, but will sell it off piece-by-piece for a better return.
“If we have a party that’s interested in the business as a whole – and that’s ultimately what we’re trying to achieve – then that’s the way we’d like to go,” Richards says.
Receivers have set a “rigorous timeframe” of six weeks to offload the business, given they have taken on what Richards calls “unsustainable” operating losses.
Brown remains with the business and is helping receivers with the restructure, but Richards says it is unlikely he will retain ownership.
Brown managed the business alongside Michael Mann, whose father Bill started the business in 1979.
Fifty-four-year-old Brown was a top executive at Linfox before joining Mannway in 1993.
In a 2007 ATN cover story, Brown said the business strategy was to “Linfox-ise” Mannway in terms of core values: “Enthusiastic, passionate staff, close customer relationships, long-term contracts, seven-day weekly payment and being flexible with customers’ needs.”
“There is room at the top for a strong second-tier player,” he said at the time.
Mannway runs some 600 vehicles and manages 10 warehousing sites in New South Wales, Victoria and Queensland with more than 100,000 square metres of customer storage.
More than 300 staff are employed by the operator.
YOUR SAY: What do you think about the Mannway collapse? What is the impact on the surrounding market? How hard are the current business operating conditions? Leave your comments below, join the debate on Twitter by following @atnmag or send your off-the-record tips via e-mail.
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