£5m cash shortage puts Fastrack under
£5m cash shortage puts Fastrack under
BY ALEXIS NOLAN UK parcels firm Fastrack went into receivership last week, just hours after a profits warning sent the company’s shares tumbling by 35%.
The company blamed its demise on the failed implementation of its acquisition of loss- making Ontime Logistics from Jacobs Holdings in last October.
The £4.8m( 7.6m) purchase gave Fastrack a turnover of almost £50m ( 79m) and a depot network of more than 70, but integration problems left the group losing customers.
As part of the Ontime Logistics deal Jacobs Holdings took a34% stake in Fastrack.
Michael Kingshott, MD of Jacobs Holdings and chairman of Fastrack since the beginning of this month, said: “By 16 January I became aware that things were not going as well as they ought to be.
“The business was returning to a very good footing but going forward required further cash which we felt it inappropriate for us to provide.” Kingshott said that Fastrack had needed at least £5m (7.9m) to escape going into receivership.
While he complemented MD Philip Rose on the work he had done to try to turn the business around from late last year, he said that home shopping deals organised by the previous management had been at the root of problems.
“The network was swamped by the home delivery work and as a result failed to deliver the fundamental business-to-business product.
Service levels fell apart and the downfall was caused simply by attrition of business.
“It’s just such a shame that he [Rose] and the team could not raise the necessary funds.
A lot of clients were coming back, but just not fast enough.” Jacobs has set aside around £6m ( 9.5m) as a provision against losses from its stake in Fastrack.
Receiver KPMG said that there had been some interest in taking over the business, although this was thought to be the international side, rather than the domestic UK network.
KPMG said that domestic turnover was £32m ( 50m) and international £12m ( 19m).
Paul Jackson, CEO of Triangle Management Services which last year ranked Fastrack as one of the best express companies in the UK, said: “There were just not enough franchisees available for them, and even when the two came together, that clearly wasn’t enough.”
Posted: 26/01/01
