Korda Mentha seek short-term funding from supermarket clients

Private equity firm Anchorage Capital Partners bought Scott’s and its fleet of 500 trucks and 450 rail containers in mid-2020 from ASX-listed car dealer AP Eagers.

Receivers Korda Mentha are closing in on a short-term funding deal with Coles and Woolworths for the failed Scott’s Refrigerated Logistics as about 20 potential buyers run their eyes over the company’s books.

Lawyers were still locked in discussions over a short-term cash injection aimed at keeping Scott’s Refrigerated Logistics Group trucks on the road late on Tuesday, as the data room opened for a potential sale of the collapsed logistics group.

Owner Anchorage Capital Partners is understood to be looking for the quickest exit it can get, rather than the best price, with a joint funding deal from major Scott’s clients - including Woolworths, Coles, IGA and Aldi, needed to keep goods flowing until a buyer with deeper pockets can be found.

About 20 parties are understood to be in a data room running the ruler over Scott’s Refrigerated Logistics Group after it collapsed on Monday.

DataRoom understands that as well as Toll Holdings and Lindsay Brothers, Ron Finemore Transport was also seriously considering an acquisition of the company.

Ron Finemore already partners with Ampol, Aldi, Woolworths, Big W, Nestle and Simplot.

A handful of those looking at the business are thought to be tyre kickers, but the process will narrow towards the end of the process, set to last about four weeks.

Among the lenders to Scott’s are Gordon Brothers, believed to be owed about $70m and Scottish Pacific.

Gordon Brothers continues to provide financial support to the company.

KordaMentha’s Scott Langdon, Kate Conneely, Michael Korda and John Mouawad are acting as receivers on behalf of creditors, while Anchorage has appointed McGrath Nicol as the voluntary administrator of the business.

Anchorage purchased Scott’s in 2020 from AP Eagers for a price understood to be about $75m and has been making efforts since that time to turn around the business.

It was originally set to sell to China’s HNA in 2019 for $400m, but HNA abandoned the plans due to liquidity problems and a new sale process was launched.

Sources close to Scott’s say the company has battled floods, Covid-19 lockdowns and major electricity and fuel price increases, prompting the voluntary administration, despite good progress with the company’s turnaround.

Trading under the Scott’s, Rand, JAT and Harris brands, Scott’s operates Australia’s largest national cold chain road and warehousing network, employing about 1500 people, with customers including Coles, Woolworths, Aldi and IGA.