Unipart Automotive, one of Britain’s biggest providers of second hand vehicle parts, is set to enter company administration after their endeavour to find a buyer to purchase the whole company failed.
KPMG representatives Mark Orton, Will Wright and Jonny Marston have been appointed as co-administrators to Unipart Automotive Ltd, which had an estimated 1,800 members of staff on its payroll.
Administrator makes 1300 Employees Redundant
The company’s insolvency has resulted in nearly 1,300 of its existing employees being made redundant, though the impact of its struggles has been somewhat minimised after the administrators successfully negotiated a part-rescue deal with Unipart Automotive’s industry counterparts, The Parts Alliance and Andrew Page.
Andrew Page is believed to have purchased 21 of Unipart Automotive’s 180 branches, whilst the Parts Alliance has been confirmed to have bought 12. It has been estimated that the move has saved over 350 jobs, with the transfer of the employees being undertaken with immediate effect.
However, the remaining branches of the company have officially stopped trading and a grand total of 1,244 members of staff have lost their jobs. Administrators have identified that the remaining employees have been kept in order to aid administrators.
Mark Orton, partner at KPMG and co-administrator, said: “Despite intensive efforts over recent weeks, a sale of the whole Unipart Automotive business could not be reached, and a buyer could only be found for 33 of the sites on a going concern basis.
“Unfortunately, the business had been experiencing financial stress for a number of years, so the level of cash and further operational restructuring required to rescue a more substantial part of the business posed too much risk for most interested parties.
“Our team of employment specialists will be supporting all staff on completing redundancy forms and putting them in touch with job seeker services. We will now be reviewing what options are available for the remainder of the business, such as selling leasehold interests.”
The end of a turbulent and uncertain period
The confirmation of the company’s entry into administration marks the end of a turbulent and uncertain period for all involved with the business, after numerous attempts by its directors to acquire the much needed cash injection to bolster its financial prognosis.
Unipart Automotive was initially purchased by private Dutch firm, H2 Equity Partners, from the Unipart Group back in 2011, and was already struggling financially after an extended period of posting losses.
The Unipart Group were allowed to keep a 49% equity stake in the business, though they were not permitted to exert any influence over the direction of the company, as specified in the terms and conditions of its sale.
And despite providing vehicle parts to a series of prominent and illustrious clientele, such as the AA and Kwik-Fit, the company has failed to improve their financial situation since 2011, with a recent drop in the prices of their products having an exceedingly detrimental impact on their profit margins.
It appeared for a short period this year that its fortunes had begun to turnaround after its stakeholders injected further cash into it through a refinance deal. However, its difficulties have since been substantiated after its suppliers subjected it to far more restrictive terms.
In the past few weeks, the company’s directors have been holding rescue meetings with the businesses largest competitor, the Euro Car Parts, and financial support fund Better Capital, though talks broke down this week and the company has been forced to enter into administration and accept a part-sale arrangement with Andrew Page and Parts Alliance.
“The Unipart Automotive situation is extremely sad as we know many of their team with whom we have long standing industry relationships. However, I would like to say on a personal level that it has been a privilege to be able to help contribute to saving a number of the jobs involved”, said Jim Sumner, executive chairman of Andrew Page.
“This development also now puts us well on the way to achieving our stated goal of building a truly national distributor with a network of over 150 branches – this acquisition will take us to 114.”
“This highly complex deal has only been possible through the backing of a number of people – we would not have been able to do it without the support of John Neill, Chairman and Chief Executive of the Unipart Group , and his team.
“They worked with us in a very constructive and collaborative way and we look forward to building a strong ongoing relationship with them. Also The Parts Alliance our investor partners Phoenix Equity Partners and in particular Endless LLP who have been key to enabling this transaction to be completed”, said Sumner.
John Neill, chairman and chief executive of The Unipart Group, said: “We are saddened by the Unipart Automotive situation but we know Andrew Page well and respect their near 100 year history in the automotive aftermarket. They have a strong reputation for selling high-quality products and brands and we’re pleased to have been able to support Jim Sumner’s plans to secure a future for the number of branches and former Unipart Automotive people.
“We look forward to working with Andrew Page to ensure the continued supply of high-quality Unipart branded products to Britain’s car owners and Unipart Car Care Centres.”
And despite the company’s entry into administration, Indra Harrison, investment director at Endless LLP, has praised all the parties involved with the part sale of the 21 Unipart Automotive for working collaboratively so effectively and formulating and facilitating the rescue deal in just five days.
Harrison said: “We pulled together this rescue deal in less than five days from offer to completion, which is testament to the working relationship between Andrew Page, The Parts Alliance and Unipart Group. We are very excited about the future, working with our new partners and this transaction will accelerate Andrew Page’s sales well beyond £200 million.”