Monday 18th Dec 2017 - Logistics Manager

DX raises £6.5m for transformation strategy

DX has raised £6.5 million to finance its stand-alone transformation strategy through a mix of sale and leasebacks on property and an unsecured loan from its largest shareholder.

The move follows the collapse of its plan to merge with Menzies Distribution. It is raising £4.5m from a property sale and leaseback deal with ChanceryGate (Livingston). And it has agreed a £2m unsecured loan with a fund controlled by Gatemore Capital.

The money will be used principally to repay the company’s term loan with HSBC, which is the first step of an essential comprehensive refinancing of the company.

In a statement, DX said it was currently “in close and constructive discussions with certain key shareholders regarding this broader refinancing.

“This is necessary because the board has identified a near term material funding requirement, over and above the company’s existing resources, to address a working capital shortfall, caused by the company’s recently reduced levels of profitability, and to provide funds for the planned investment into improving the financial performance of the DX business.

Chairman Bob Holt said: “We welcome the support of our shareholder, Gatemore, alongside that of our bank, HSBC, as we proceed with our standalone transformation strategy, and will provide a further update on the company’s financing arrangements within coming weeks.”

Liad Meidar, managing partner of Gatemore Capital Management, said: “The Gatemore loan has enabled the company to pay down HSBC’s term loan while retaining the freight hub in Willenhall. This gives the company greater financial and operational flexibility, setting the stage for the refinancing. We expect to roll our loan shortly into the new financing, positioning DX with a healthy balance sheet and a new start under proven leadership.”