City Link administrators announce 2,356 job losses
Administrators from EY confirm job losses as last-minute rescue deal fails
ADMINISTRATORS at failed delivery firm City Link have announced 2,356 job losses after a last-minute attempt to save the company fell through.
The administrators from EY, who were appointed to the courier company on Christmas Eve, confirmed that the majority of the company’s staff were made redundant on New Year’s Eve, with 371 employees retained for a short period to wind down the company’s operations.
An unnamed consortium’s bid to buy the company was deemed unacceptable because it offered no money up front and undervalued the assets to be acquired, EY said. The administrators added they had proposed an alternative structure “that would be acceptable and common in these situations” but the consortium, “despite attempts to make them reconsider, declined to amend their original offer”.
Hunter Kelly, joint administrator of City Link, said: “It is with regret that we have to announce substantial redundancies at City Link Limited, which ceased accepting new parcels on 24 December 2014. The company endured substantial losses, which ultimately became too great for it to continue as a going concern, and City Link Limited entered administration following an unsuccessful sale process.
“At meetings across City Link Limited’s UK sites on Monday 29 December 2014 and Tuesday 30 December 2014, employees were informed that there would be substantial redundancies as no new business was being taken on. Many of these employees were sent home, and informed that they would shortly receive formal correspondence to confirm their work status.”
Better Capital, the private equity firm owned by Conservative donor Jon Moulton, bought City Link for £1 in 2013 but was unable to turnaround the company’s fortunes, which had suffered from intense competition in the sector, changing customer and parcel recipient preferences, and difficulties 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,” EY said