DX Group scraps sale of Willenhall site
Delivery group DX has pulled plans to sell off its major Willenhall depot site, where more than 500 people work.
The company revealed this morning that it had taken the site, in Ashmore Lane Way, off a list of sites lined up for sale.
It will be a massive relief to workers at the company's hub operation after fears DX might move it out of the area after its plans for a major new £36 million hub at Essington were blocked by local councillors earlier this year.
The idea had been to move the Willenhall workforce to the new site and recruit up to 150 new staff, but following bitter opposition from local people South Staffordshire planners refused permission for the scheme.
The company said at the time that it might have to look at alternative sites around Rugby or Coventry because it needed a bigger, more modern, facility. There were fears about what this might mean for the 500-strong workforce at Willenhall.
But there will be relief today at the news that the site will remain in company hands. In a statement to the City the company said it was a "site of potential strategic value to the company". The company's Crestwood House site in Birches Rise, Willenhall, is also being retained.
Willenhall would have formed part of a fund-raising sale and leaseback deal involving a number of DX Group sites – including Basildon, Northampton and Nottingham – as part of an "essential comprehensive refinancing" of the company, including repayment of a £5.8m HSBC term loan. The company also needs fresh funding because of recently reduced levels of profitability and the need to invest in improving DX's performance..
DX said it had initially included the freight and logistics hub at Willenhall in the portfolio for sale but, following discussions with a new management team that is due to take over, 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.
One of DX's main shareholders, Gatemore, has provided a £2m loan to assist the company.
Liad Meidar, managing partner of Gatemore Capital Management, 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."
The company is hoping for a turnaround after a tough year that has seen chief executive Petar Cvetkovic and finance chief Daljit Basi leave the business.
As well as losing out on the new hub at Essington, it has had to deliver a profits warning after tough trading earlier in the year and a £40 million merger with John Menzies' distribution business was scrapped.
A week ago the company also had to reveal an accounting error that will knock £1.8 million of DX Group's profits for the last year.
The company is now in the throes of changing its management and reorganising into two new divisions.