Lenders to Addison Lee are preparing to seize control of London’s second-biggest minicab company as part of a looming restructuring that could see it forced into administration as predicted exclusively at Cab4Now.com on 8th February 2019.
We can now reveal that a syndicate of more than a dozen banks led by the Dutch financial giant ING have drafted in advisers from Alvarez & Marsal (A&M) to consider their options amid a protracted auction of the taxi giant.
The move comes months before about £200m of debt becomes repayable by Addison Lee, which has been owned by the US buyout firm Carlyle since 2013.
“Carlyle is out of the money: it increasingly looks like a question of when the lenders take the keys,” a source close to the creditors said this weekend.
One potential outcome would be for the lenders to take ownership of Addison Lee through a pre-pack administration in the coming months if the sale process falters, a source close to its banks said this weekend.
Other options, including a successful sale, remain on the table, they acknowledged.
The company has retained the accountancy firm Deloitte to work alongside Bank of America Merrill Lynch and Rothschild, the advisers on the auction.
In recent weeks, a number of turnaround funds have been approached to gauge their appetite for a takeover of Addison Lee, which directly employs 1,000 people and has about 5,000 drivers on its books.
Those approaches have fuelled lenders’ expectation that they may ultimately own the company, however briefly, said a person close to them.
The majority of Addison Lee’s £230m debt is due to be repaid next April.
Sources close to Addison Lee insisted this weekend that the sale process was ongoing and that it was continuing to see “strong interest” from private equity firms and strategic bidders.
Carlyle kicked off the auction six months ago, attracting tentative scrutiny from financial sponsors and companies including Uber Technologies and Ola, the Indian ride-hailing app.
A formal offer worth in excess of the value of Addison Lee’s debt has yet to materialise, however.
While valuations as high as £800m were suggested earlier in the year, fierce competition from Uber and the patchy performance of Addison Lee’s US business have contributed to substantial losses at the British company.
Bankers are said to have raised the idea of a break-up of its operations in an effort to smooth the path towards a sale.
Its UK business is understood to 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 revenues but recorded pre-tax losses of almost £39m, up from £20.8m a year earlier.
It said it had grown revenues by 47% over a three-year period “in an incredibly competitive market”.
Addison Lee, which was established in 1975 by John Griffin, says it transports more than 10 million people in London alone each year, giving it a market share of roughly 10%.
A spokesperson for the company said: “Addison Lee is engaged in an ongoing sale process, which has the full support of its shareholders and lenders.
“The business traded in line with its business plan through September 2019, has more recently won several large new contracts, and fully expects a successful conclusion to the current sale process.
“In the meantime, it remains business as usual for Addison Lee, our people and driver partners and we continue to provide a first-class service to passengers globally.”
Run by Andy Boland, its chief executive since 2015, the company has pledged to introduce a fleet of self-driving taxis in London by 2021 after striking a partnership with Oxbotica, a self-driving software specialist.
The shift towards cleaner cars and autonomous vehicles is leading previously unconnected companies to co-operate on a series of major initiatives.
Addison Lee, for example, is working with partners including Ford in a consortium called MERGE, which is making the case to introduce autonomous vehicles to the Royal Borough of Greenwich.
Attempts to sell Addison Lee come as Uber is embroiled in a battle to persuade regulators in London to award the company a new long-term licence.
It was recently awarded a two-month interim licence which expires in about four weeks’ time.
Like Uber, Addison Lee has found itself in the firing line in the debate about the gig economy, with a tribunal in 2017 ruling that its drivers were workers and therefore entitled to holiday pay and the national living wage.
A Carlyle spokesman declined to comment.