Australia’s largest fully integrated cold-chain logistics provider, Scott’s Refrigerated Logistics, has gone into receivership, with KordaMentha appointed receiver.
Scott’s employs around 1500 people. Its customers include suppliers to the major retailers, and as a distributor for some of those retailers, independent supermarkets, food manufacturers, and exporters.
A spokesperson for Woolworths Group told Food & Drink Business they were aware a number of its supply partners could be affected by the news.
“It’s early days and we’re watching developments closely. We are in the process of contacting those suppliers to get a better understanding of how Woolworths can support them,” the spokesperson said.
The logistics behemoth serviced its customers from 24 cold storage facilities in all Australian mainland states and with a transport fleet of around 500 trucks and 450 rail containers.
KordaMentha partner Scott Langdon said it expected a high level of interest in the business and its assets, “given its significance in the cold chain supply system in Australia”.
“Right now, we are seeking support from all customers to give the business the best chance of being sold to a new long-term owner,” Langdon said.
Media reports on Wednesday said Mentha had called for indicative bids by Friday, with three trade companies circling - Toll Global, LinFox, and Lindsay Australia.
Anchorage Capital Partners (ACP) bought Scott’s in 2020 for $75 million from car dealership group AP Eagers.
ACP said it had identified the company was underperforming industry benchmarks but had plans to turn it around with investments in “people, processes, and equipment to improve both service quality and profitability, and to grow the business to be the clear leader in the refrigerated logistics industry in Australia”.
Its plans came undone as a global pandemic wreaked havoc on supply chains and faltered even further with floods and other natural disasters across the country. Rising fuel costs and the Ukraine war compounded its financial woes.
In August last year, advisory and investment company Gordon Brothers gave Scott’s a $70 million asset-based lending facility to provide additional working capital for ACP’s operational improvement plans.
Gordon Brothers senior managing director Matt Aubrey said the package was based on valuations of Scott’s assets and designed to enable its growth goals.
Scott’s chair and managing partner at ACP Simon Woodhouse said the refinancing would “support the continued business transformation program and provide a strong platform for growth while benefiting leading food producers, retailers and consumers,” said Woodhouse.
It appears that all came to naught on Monday, when ACP appointed McGrathNicol as Scott’s voluntary administrator. Its secured creditors – Gordon Brothers and Scotpac Business Finance – then stepped in and appointed KordaMentha as receiver.
The Transport Workers Union (TWU) said the sector was Australia’s deadliest industry and in the top 10 for insolvencies, with razor-thin margins common for transport operators.
TWU national secretary Michael Kaine said, “This is another tragedy of the untrammelled commercial power at the top of transport supply chains. Retailers are reaping the gains from razor-thin margins while operators and drivers collapse under the strain.
“The TWU is working with KordaMentha to ensure workers are prioritised in what we hope will be a sale to a responsible buyer.”
