Autocare Services employee updates
Your hub for important information and resources to support you, as an employee of Autocare Services during the voluntary administration process.
– VA Process
- The Voluntary Administration process is designed to have two meetings of Creditors. The second meeting allows the Administrators to make a recommendation to creditors in order that they can vote on the future of the Company
- In Autocare, the first meeting of creditors was held on 16th February 2021
- The second meeting of creditors occurs after the end of the Convening Period. The Convening Period, usually ends 21 business days after the commencement of Administration. The Administration Process, does in certain circumstances, allow for the Administrators to extend the Convening Period (with the approval of the court) for a period longer than 21 business days, in the event there are sufficiently complex issues that need to be determined, such that the Administrators are unable to provide a recommendation to creditors within the 21 day period
- The Administrators made an application to court on Friday 26th February 2021, and the court has agreed to extend the Convening Period up to and including 24th May 2021 – this provides the Administrators the flexibility to call the second creditors’ meeting at any stage up to the end of the Convening Period. The second meeting of creditors is then required to be arranged within five business days before, or five business days after the end of the Convening Period. The exact timing for the second creditors’ meeting is still to be determined, as it will be dependant upon the outcome of the sales process, however please note the latest it can occur would be 31 May 2021
– Sale of business
- The Administrators have conducted a marketing process for the sale of the business as a going concern
- The Administrators have received strong interest from both inside and outside the logistics industry
- The closing date for the first stage of the sale process is Friday 5th March 2021. At this stage, interested parties will make non-binding indicative offers
- Commencing next week, the Administrators will review the offers and engage with the interested parties. It will not be until after the first stage offers have been received and negotiated that the Administrators know how long the second stage of the process will take. The second stage of the process will conclude when final binding offers are received. We will provide further updates on the critical milestone dates for the process as they come to hand
- Autocare Senior Management have continued to engage with all our customers in relation to ongoing operations. Apart from the departure of Hyundai, negotiations regarding the terms and conditions with Autocare’s existing customers into the future are ongoing
- The Administrators continue to work with Hyundai in relation to the transition plan around their departure. At this point it is too early to put a definitive date on when Hyundai will relocate their operations
– Property exits
- Autocare has exited the following properties:
- Ingleburn – our people have relocated to the Dapto site, bringing the end of an era for the Ingleburn facility; and
- Springhill Road
- Thanks to all staff who contributed to the smooth transitions and exits from these facilities, and the safe and efficient manner in which the exits were conducted
– Property commencements
- Having brought together operations at existing facilities, since our last newsletter, the following has been achieved:
- 20+ repairs Completed at Dapto this week, these are the first repairs completed onsite;
- First Isuzu Built at Dapto 26/02/21, Start of a new era;
- First Day Of JSA Supported method for condensing vehicles without a bus ( mobile delineation ); and
- First Vehicles Sent To Wollongong External Paint Shop Repairers
- Your safety and wellbeing remains a key focus of the business at all times. Please be aware of your surroundings and the welfare of your workmates, and ensure that all issues are properly documented and addressed as soon as practical
- Thanks for your commitment to safe operations and the business
- We intend to provide weekly updates via newsletter on the Administration. The updates going forward will be provided on a Monday to ensure this information is disseminated to as many employees as we can in real time.
- Major updates will be done via live stream or pre-recorded video.
- The Administration has now entered its second full week of operations, and from our perspective, operations have settled back to something approaching normality.
- The Administrators understand that apart from a few teething problems with stock ordering and purchasing, these issues have largely been resolved.
- If staff are still experiencing issues brought about by the Administration process, please contact your line manager, who will liaise with the Administrators’ staff.
- Our key customers continue to offer us their support, as have Autocare’s suppliers, which has contributed to operations resuming largely as they were prior to the Administrators’ appointment.
- The Administrators and Autocare’s Senior Leadership Team (“ASLT”) have had multiple discussions and meetings with all of Autocare’s customers.
- The Administrators and the ASLT continue to engage and negotiate with Autocare’s key customers with many of these negotiations well advanced in relation to revised sustainable trading terms.
- Key customers have re-iterated their support for Autocare and the Administration process and understand the requirement to bring about change to Autocare’s operations and the business’ sustainability.
– Hyundai update
- We have been advised by Glovis Australia, that they do not intend to accept the proposed new trading terms to put Autocare on a stable and sustainable footing moving forward and as such, they have issued a Notice to Terminate the Hyundai contract ONLY.
- Importantly, the Kia contract remains on foot and negotiations with respect to revised trading terms remain ongoing.
- The Hyundai contract has been unprofitable for Autocare for some time and this decision is not unexpected.
- The loss of Hyundai will eventually reduce the volume of vehicles that are stored, processed, and transported by Autocare.
- The transition period and the end date of the contract are still being determined by the Administrators and Glovis, and this process will likely take up to eight weeks (but may be longer).
- The Administrators do not envisage any immediate changes to staffing levels as a result of the Hyundai termination. With respect to the go forward business, any excess staffing capacity will be re-directed to better serve our key customers in the first instance.
- The future changes (if any) to staffing levels that are required will be determined once final agreement on the transition period is reached and remaining negotiations with customers are completed.
- Autocare staff will be kept informed of any changes to roles and operations during this period.
- Whilst this news is disappointing, it was just not feasible for Autocare to continue to service Glovis’ existing Hyundai contract, which was consistently loss making.
- The First Meeting of Creditors for Autocare Services Pty Limited was held on Tuesday 16th February 2021. The meeting was held virtually, with approximately ~47 creditors in attendance and 26 observers.
- The meeting was chaired by Joseph Hansell, one of the Administrators.
- At the meeting, the following procedural issues occurred:
- There was no vote to change the Administrators, and Christopher Hill, Joseph Hansell and Ross Blakeley of FTI Consulting will remain as Administrators; and
- Creditors voted to install a Committee of Inspection.
- A Committee of Inspection is a group of creditors who are representative of the general body of creditors and can act as a sounding board for the Administrators during the Administration process.
- The Committee of Inspection is comprised of the following:
- In the First Meeting of Creditors, the Chairman provided creditors with a general update in relation to the status of the Administration to date.
The meeting was opened for questions, at which the following were asked by creditors:
- Question: What is the likelihood of unsecured creditors seeing any of the money they are owed?
- Answer: At this point in time, it is too difficult to tell. We are undertaking a sale/recapitalisation process and we will have a clearer view of the return to unsecured creditors once this process is finalised.
Note: Employee entitlements will be met in full. This question and answer only pertains to unsecured creditors.
- Question: How have the Administrators formed the view that there is a “high degree of certainty” there will be a sale/recapitalisation
- Answer: This has been based off the number of discussions with interested parties and high activity in the data room with potential buyers. Further, LINX CCG has expressed that it will likely put a Deed of Company Arrangement proposal forward with respect to the recapitalisation of the business.
- Question: How many unsecured creditors are there in this Administration?
- Answer: At this stage we have 275 unsecured creditors.
- The meeting ran for one hour.
– Sales/recapitalisation process
- The final booked advertisements for the sale of the business ran on Wednesday 17th February 2021.
- The Administrators have received strong interest from a significant number of parties as a result of the advertisements and the general market knowledge as to the appointment of Administrators.
- Interest has come from both inside and outside of the logistics industry, that is both trade buyers and private equity players.
- The Administrators consider the number and nature of the parties expressing interest is a positive sign and reflective of the quality of the staff, customers, and operations of Autocare.
- The safety and wellbeing of employees remains a key focus of operations for both Autocare, the Administrators and the ASLT.
- The Administration would like to emphasise, that there has been no change to the safety procedures brought about by the Administration, so please ensure that all work is continued to be conducted safely and in accordance with existing policies and procedures.
- The Administrators would like to thank all employees for their assistance during this challenging period and acknowledge the positive impact that staff have made to the Administration process.
- We intend to provide weekly updates via newsletter on the Administration.
- Major updates will be done via live stream or pre-recorded video.
- Read more below to watch the video update with Simon Abela and Joseph Hansell (Administrator).
- Apart from a few minor issues as expected in the first week of an Administration, it has been business as usual and we thank you all for your continued support and professionalism in facilitating this.
- The Administrators would also like to thank the subcontractor fleet for their support and keeping the wheels moving.
– First meeting of creditors
- The first meeting of creditors is scheduled for Tuesday, 16 February at 2pm AEDT.
- This meeting is relatively procedural and only two resolutions are put to the meeting. That being, the formation of the Committee of Inspection (if requested) and confirming the appointment of Administrators.
- Employees may wish to appoint a Proxy on their behalf to represent them at the meeting or on the Committee of Inspection (if formed).
- Shortly after the first meeting of creditors, the Administrators will also be looking to extend the convening period for the second creditors meeting, which determines the future of the company, for a period of up to 90 days. This is to allow enough time to conduct the sales process, negotiate with customers and landlords with respect to the go forward business.
– Sales/recapitalisation process
- An advertisement for the sale of the business by way of sale or recapitalisation was placed into the Australian Financial Review on 10 February.
- We will ask Interested Parties to submit initial offers in relation to the business by the start of March.
- Interested Parties will be shortlisted to conduct further detailed due diligence in Stage 2 with final binding bids due at the end of that process.
- It is currently envisaged that Stage 1 and Stage 2 will run for 8 weeks but can be shortened or extended at the Administrators discretion.
- It is our current expectation that there will be a sale of the business or recapitalisation of the business by way of Deed of Company Arrangement. Either way, this is not a shut down scenario where the business will be placed into liquidation but rather, one where we anticipate the business will come out the other side, on a much more stable footing.
- Key to achieving that aim is the continued support of all stakeholders, from customers, suppliers and critically, employees and subcontractors – and so we would like to reiterate our thanks for the ongoing support from yourselves.
– Employee entitlements
- Wages are being paid as per usual.
- Superannuation will be funded and paid up to date including pre-appointment amount.
- All employee entitlements will be funded as and when they fall due.
- Employees should not be concerned about a shortfall or their entitlements.
Autocare Services has been placed into voluntary administration.
Christopher Hill, Joseph Hansell and Ross Blakeley of FTI Consulting have been appointed as the administrators.
As you are all aware, our business has been experiencing some tough times recently and the future wasn’t looking any brighter.
Voluntary administration allows for the business to be reviewed and for any necessary changes to be made to the services we provide our customers.
LINX CCG is continuing to support Autocare through the voluntary administration process and will work with the administrators to support any changes to the Autocare Services business.
We want our business to keep delivering services today, and into the future – so do our customers.
Voluntary administration provides the business with this opportunity.
The decision to place Autocare into voluntary administration was necessary due to:
- Successive years of operating in volatile market conditions, declining vehicle volumes and increasing operating costs, significantly impacting Autocare’s ongoing financial viability.
- Whilst we have seen a recent spike in new vehicle demand, new vehicle sales * and storage volumes are not forecast to return to levels that Autocare can sustain in its current structure.
- Market volatility heightened by the ongoing COVID-19 pandemic.
Watch the Autocare Services announcement recording here.
For more information to support you, go to the Resources section.
For the official LINX Cargo Care statement visit the Autocare website.