News

LM Logistics, the cash-strapped Felixstowe forwarding and distribution business, has secured its future after the overwhelming majority of its creditors accepted a proposed rescue deal (MT 15 October).

Under the plan, 98% of its creditors agreed to the firm entering a Company Voluntary Arrangement (CVA), which enabled the firm to secure a £500,000 external investment  from business rescue specialist Merchant Corporate Recovery (MCR) in exchange for 51% of LM's shares.

Unsecured creditors will now receive a dividend of 27 pence in the pound, potentially rising to 41 pence in the pound depending on the future performance of sister company Syntex Logistics and its ability to repay a £300,000 inter-company loan.

Tony Barnes, MD at LM Logistics, says he is "relieved and optimistic" now the deal has been concluded.

He adds: "A CVA is not a good experience for anyone, clearly. However, the level of support we have had from creditors is humbling - they could have said 'we'll let it go to the wall'."

The £500,000 investment is to enable the company to meet its short-term cashflow requirements, says Barnes, but stresses that more finance is available if necessary.

Although  MCR has no previous experience in the transport sector, save for the ownership of a coach operator, Barnes believes the deal with LM could act as a stepping stone.

Barnes and fellow directors Nick Lindsay and Phil Perkins remain on LM's board, joined by three representatives from MCR. However, Barnes is adamant that the day-to-day running of the business will remain at local level.

He adds: "We have been told [by MCR] that we are here and we run the company, but it's nice to be able to run it under the umbrella of a financially strong organisation."

LM's Bradford-based freight forwarding operation has been sold to its management, Graham Meggitt and Steven Cooper, in a £30,000 deal and has been renamed CMI Logistics.