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Addison Lee lenders prepare to take steering wheel

by ace
Addison Lee

Addison Lee's creditors are preparing to take control of London's second largest minicab company as part of an imminent restructuring that could lead to management.

Sky News may uniquely reveal that a union of more than a dozen banks led by Dutch financial giant ING has called on Alvarez & Marsal (A&M) consultants to consider their options amid a lengthy auction of the taxi giant.

The move comes months before about £ 200 million in debt became repayable by Addison Lee, which has belonged to US acquisition firm Carlyle since 2013.

"Carlyle is out of money: it seems increasingly like a question of when lenders get the keys," a source close to the lenders said this weekend.

One potential result would be for lenders to take over Addison Lee through prepackaged management in the coming months if the sale process fails, a source close to his banks said this weekend.

Other options, including a successful sale, remain on the table, they acknowledged.

The company hired accounting firm Deloitte to work alongside Bank of America Merrill Lynch and Rothschild, the auction consultants.

In recent weeks, several recovery funds have been approached to gauge their appetite for an acquisition of Addison Lee, which directly employs 1,000 people and has about 5,000 drivers in its books.

These approaches have fueled lenders' expectation that they may finally own the company, albeit briefly, said a person close to them.

Most of Addison Lee's £ 230 million debt is due to be paid back next April.

Sources close to Addison Lee insisted this weekend that the sale process was underway and continued to see "strong interest" from private equity firms and strategic bidders.

Carlyle started the auction six months ago, attracting tantalizing scrutiny from financial sponsors and companies like Uber Technologies and Ola, the Indian hitchhiking app.

However, a formal offer that exceeds the value of Addison Lee's debt has not yet materialized.

While valuations of as much as $ 800 million were suggested earlier this year, fierce competition from Uber and the uneven performance of Addison Lee's US business contributed to substantial losses at the British company.

Bankers are said to have raised the idea of ​​a break-up of their operations in an effort to ease the way for a sale.

It is understood that its UK businesses generate cash, but the group's financial performance has been hampered by its results elsewhere.

In its results for the year to August 2018, Addison Lee posted a 13% increase in revenue but reported pre-tax losses of almost £ 39m, up from £ 20.8m a year earlier.

The company said it increased revenue by 47 percent over a three-year period "in an incredibly competitive market."

Addison Lee, founded in 1975 by John Griffin, says it transports more than 10 million people in London alone each year, giving it approximately 10% market share.

A spokesman for the company said: "Addison Lee is involved in an ongoing selling process that is fully supported by its shareholders and creditors.

"The deals negotiated under its business plan until September 2019, have recently won several major new contracts and expect a successful completion of the current sale process.

"Meanwhile, it remains normal for Addison Lee, our team and driver partners, and we continue to provide first-class service to passengers around the world."

Run by Andy Boland, its chief executive since 2015, the company has promised to introduce a fleet of autonomous taxis in London by 2021 after closing a partnership with Oxbotica, a standalone software specialist.

The move to cleaner cars and autonomous vehicles is leading previously unconnected companies to cooperate on a number of major initiatives.

Addison Lee, for example, is working with partners, including Ford, in a consortium called MERGE, which is introducing autonomous vehicles at the Royal Borough of Greenwich.

Attempts to sell Addison Lee come as Uber is embroiled in a battle to convince London regulators to grant the company a new long-term license.

Recently, a two-month interim license was granted, which expires in about four weeks.

Like Uber, Addison Lee found himself in the firing line in the debate about the show's economy, with a court in 2017 ruling that its drivers were workers and thus entitled to vacation and national living wages.

A Carlyle spokesman declined to comment.

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