|How it all started Red Star Parcels Network|
became CITY LINK
CITY LINK in administration
1970 – City Link goes Nationwide – growth, expansion, consolidation
1972 – City Link renamed – City Link Transport Holdings Ltd
1980 – Association of City Link Licensees formed and first formal franchise agreement signed
1989 – Securiguard Group plc buys City Link and City Link International formed
1990 – First national distribution centre opened in the Midlands
1992 - Next Day Service introduced
1993 – Securiguard Group plc bought by Rentokil Initial plc
1997 – Rebranded as Initial City Link
2000 – New national distribution Centre opened in Wednesbury
2005 – Announced changeover from franchise to corporate network
2006 – Rebranded as City Link Ltd
2007 – City Link and Target Express join forces
2008 – New Board of Directors appointed to integrate the two businesses
2012 – Revenues grew for the first time in many years
2013 – Bought by Better Capital for £1
2013 – The Year of the Customer - burns through near £40 million cash injection
2014 - Administrators appointed on Christmas Day
Julian Bray writes: The news that CITY LINK has gone out of business is the final knock for this long term lossmaking company, offloaded by the previous owners Rentokil Initial for just £1 to John Moultons Better Capital outfit. Rentokil acquired City Link in 2006, but City Link has lost money since 2007, including an eye watering £26m in 2012.
It never really engaged with the Internet and the bulk of its business still harked back to the golden days of the railways Red Star format, essentially reliant on small businesses and multiple drops. In itself a expensive model.
Too much reliance on corporate branding, pristine liveried vehicles, and evey time the firm was sold or acquired the first job seemed to be rebranding the entire transport fleet, whilst competitors used low cost freelance or agency drivers 'paid on a per drop basis' with their own (usually scruffy secondhand) vans and even private cars. The firm has continually struggled in the face of weakening demand for its services from small businesses. The firm always lagged behind in computing and constantly playing catch up in relation to its major competitors.
It was offload for the price of £1, by the pest control people Rentokil, offloaded to John Moutons Better Capital, who invested £40m into the business and written down £20 million. Money now lost.
Better Capital turned around fashion retailer Jaeger and double-glazing firm Everest, and was a prepared to have a crack at turning it around, then a trade exit. Unfortunately competitors had already secured the best contracts from the likes of Amazon, Next, Very and other major online shed based businesses.
The Union RMT has called it disgraceful and asked for the Government to step in, but in reality RMT Boss Mick Cash must know the game is up, for yesteryear corporate based models such as City Link. Cheap fast deliveries, low headcount on the payroll. City Link had 2,700 employees on the payroll and countless independent self-employed contractors which could push the numbers up to 5,000 plus . The latter also now out of business and no statutory redundancy payments to fall back on. A bad business and sadly other firms will follow.
But why effectively mass sack your employees by email on Christmas Day? Simple, most of the systems were safely closed down and few employees and managers inside the depots or hubs. when they reopen tomorrow it will be for customers to trace and collect their packages. No delivereies. Some major customers such as John Lewis Partnership 'may' have been upset by City Link over many months actively being 'put up for sale' if not tipped off as just a few hours after the announcement they had the 'Plan B' alternative arrangements in place and say insiders goods delivered to the original City Link timetable ... Creditors have been informally warned the eventual payout or dividend may not be more than one decimal penny in the pound... Ouch! There is also unrest that all the property assets were bundled up into another company. The administrators EY are known for legal but ruthless disposal programmes, any hope of City Link arising from the ashes, are perhaps best left with Vince Cable as yet another 'impossible dream'.
The Administrators EY (EY - Ernst & Young) released a statement:
Hunter Kelly, Charles King and Tom Lukic of EY’s Restructuring team were appointed Joint Administrators of City Link Limited (‘the Company’), the courier and parcel delivery services provider, and City Link (Properties) No.1 Limited, on 24 December 2014.
On appointment of the Joint Administrators, City Link Limited ceased to accept any further parcels from customers at either the Company’s head office and transport hub in Coventry; its three other transport hubs in West Drayton (Heathrow), Peterborough and Warrington, and its 53 depots throughout the UK.
The Company has entered administration as a result of continued substantial losses and is unable to continue accepting new parcels due to the further losses it would incur.
Operations at City Link Limited’s transport hubs and depots will be suspended until 29 December 2014 to allow the Administrators to assess the Company and the status of existing orders. The Company depots will reopen to the public on Monday 29 December 2014 and will remain open for a short period of time to enable customers and intended recipients to collect their parcels.
Customers who placed parcels with City Link Limited on Christmas Eve for delivery are urged to go to the depot to retrieve their parcels as soon as possible on or after 29 December 2014. Intended recipients of parcels who have been notified of a failed or pending delivery are also urged to go to the depot to collect their parcels as soon as possible on or after 29 December 2014.
City Link Limited’s online parcel tracking system remains live to enable customers and intended recipients to locate their parcels. The online tracking system should be used by customers and recipients to identify if they need to collect their parcels and at which depot their parcels are located. The normal helpline telephone numbers will also be open on Saturday 27 December 2014 and from Monday 29th December 2014.
City Link Limited will no longer be able to deliver any further parcels and customers are urged to make alternative arrangements for future deliveries.
At this stage, no redundancies have been made amongst City Link Limited’s 2,727 employees. However, it is anticipated that there will be substantial redundancies over the coming days, as no buyer has been identified following a sale process for the Company and its business.
Employees that are ultimately affected by redundancy will be offered appropriate advice and support in making claims for redundancy and notice pay. Employees that are not immediately affected by redundancies will be retained to help return parcels to customers at City Link Limited’s locations, as well as assist in realising the Company’s assets and winding down its operations.
City Link (Properties) No.1 Limited manages and coordinates payments on selected property leases on behalf of City Link Limited, and has no employees. The Administrators will begin winding down City Link (Properties) No.1 Limited.
Hunter Kelly, Joint Administrator to City Link Limited, commented: “City Link Limited has incurred substantial losses over several years. These losses reflect a combination of intense competition in the sector, changing customer and parcel recipient preferences, and difficulties for the Company in reducing its cost base.
“The strain of these losses became too great and all but used up Better Capital’s £40m investment, which was made in 2013 and intended to help to turn around the Company. Despite the best efforts to save City Link Limited, including marketing the Company for sale, it could not continue to operate as a going concern and Administrators were appointed.
“We have temporarily suspended operations at all transport hubs and depots until Monday 29 December 2014, when we intend to reopen depots to the public to enable customers and intended recipients to collect their parcels. We will also provide support to employees relating to potential redundancies. We are now beginning the process of realising the Company’s assets.”
Any parties interested in acquiring any parts of the business or its assets should contact the Joint Administrators immediately. +44 20 7980 0596. The Joint Administrators will provide a further update on the status of the administration over the coming days.
Peterborough Hub is at:
JULIAN BRAY 01733 345581, Journalist, Broadcaster, Aviation Security & Operations, Travel / Cruise Industry Expert, EQUITY, NUJ, Broadcast ISDN 01733 345020 SKYPE: JULIAN.BRAY.UK e&oe > Updates are on the Website