Australian Transport News - - News -

Western Aus­tralian freight and lo­gis­tics op­er­a­tor Star Freightlines has called in ad­min­is­tra­tors who are seek­ing a quick so­lu­tion to its fi­nan­cial prob­lems. The com­pany’s busi­ness is cen­tred on re­frig­er­ated trans­port and ware­hous­ing, servicing re­gional WA and in­ter­state needs, with a fo­cus on the min­ing in­dus­try cater­ing. McGrathNi­col ad­min­is­tra­tors Rob Kir­man and Matthew Caddy are in charge and are seek­ing ex­pres­sions of in­ter­est for the firm that con­trols about 20 trucks, in­clud­ing Ken­worth and Mack prime movers and Isuzu rigids, along with a fleet of re­frig­er­ated trail­ers and some fork­lifts. It has stor­age and cool­room fa­cil­i­ties in Can­ning Vale, with ser­vices to Port Hed­land and Kar­ratha in the Pil­bara, and em­ploys 25- 30 peo­ple. Though Kir­man says it is very early in the process, he has seen “some good lev­els of ex­pres­sions of in­ter­est” in the com­pany. “With the gen­eral re­duc­tion in rev­enues and con­tract­ing mar­gins we have been ex­pe­ri­enc­ing in Western Aus­tralia … it got to the stage where the level of the com­pany’s debt wasn’t sus­tain­able,” he says. “It’s a good, vi­able busi­ness but the level of se­cure debt just wasn’t sus­tain­able, and so the di­rec­tor took the proac­tive ac­tion of ap­point­ing a vol­un­tary ad­min­is­tra­tor to sta­bilise the busi­ness and al­low var­i­ous op­tions to be pur­sued. The ad­min­is­tra­tors are open to op­tions that might in­clude sales of the busi­ness and as­sets and/ or an eq­uity in­vest­ment or re­cap­i­tal­i­sa­tion by way of a deed of com­pany ar­range­ment. Kir­man put its cur­rent dif­fi­cul­ties down gen­er­ally to dif­fi­cult times af­fect­ing cash­flow of what is an other­wise solid com­pany. “It’s quite a di­ver­si­fied cus­tomer base, there are about 200 cus­tomers, not one par­tic­u­lar large client, sup­ply­ing ma­jor re­sources com­pa­nies and smaller op­er­a­tors,” he says. He adds a com­mon is­sue with mid­sized firms in the WA truck­ing mar­ket is an in­her­ent lack of flex­i­bil­ity can make it dif­fi­cult dur­ing down­turns, even for well-run op­er­a­tions. “It’s a cap­i­tal in­ten­sive in­dus­try where it can be very dif­fi­cult to re­struc­ture,” Kir­man says. “Yes, you can re­duce vari­able costs such as wages. But out­side of that, it’s a fixed- cost base pre­dom­i­nantly around ma­chin­ery and prop­erty.” There is a cer­tain level of cost- cut­ting and re­struc­tur­ing a busi­ness can do in­clud­ing the sale of equip­ment that is gen­er­at­ing a de­fi­ciency or ter­mi­na­tion of em­ploy­ees or quit­ting of prop­erty leases, but these can only go so far. “What we’ve gen­er­ally seen in the mid-mar­ket busi­nesses, par­tic­u­larly in the trans­port sec­tor, as rev­enues have de­clined and com­pe­ti­tion is a lot more fierce and mar­gins have de­clined, a lot of busi­nesses have seen a re­duc­tion in trad­ing per­for­mance,” Kir­man says.

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