0 10, Plucky fighter who
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qv aimed for big stakes
THIS IS THE story of a tough little fighter up against two rather large opponents. He has absorbed as many punches as he can take and is now on his knees, waiting for the bell to ring and for someone to give some words of encouragement. His opponents are crowding him and will not let him up. In this match there is no referee.
The stakes for the fight are high — Seddon Atkinson, the British lorry building subsidiary of American-based International Harvester.
In the one corner is lorry dealer Tony Walker and his second, Charles Leonard (see feature article p31). Between them they have managed to raise enough cash for IH to take their purchase bid seriously — — £4.25m.
Their reasons for entering the fight are simple: they believe Seddon can be returned to profit, despite its £4.9m loss in 1982; they believe that a blow needs to be struck for the British lorry manufacturing industry; and they believe that their plan of achieving Seddon's turnaround will mean taking on more workers rather than making redundancies.
So who are his opponents? One has been in training for Seddon for some time. Enasa, the Spanish state-owned manufacturer of Pegaso commercial vehicles. The other is less well known in this context, but has been encountered by many people. Some know it as the Bank of England, others Lloyds Bank or National Westminster.
In fact it has 45 names, this being the number of banks that Mr Walker has approached for financial backing to buy Seddon.
Their second is the Government, represented by the Department of Trade and Industry.
The build-up to the fight has been going since the summer of 1982. IH wants to sell Seddon to streamline its operations. It wanted General Motors to buy Seddon. If this failed, them the bidder offering the best overall package as soon as possible would win. Mr Walker put up an initial deposit of £4.25m to be followed by a total working capital of £15m. International Harvester was very interested and accepted him as a contender.
A meeting was held in Manchester with Mr Walker, and four top executives from IH flew over to see him. The results were encouraging and IH said it was very interested.
The package is comprehensive and covers financial details as well as how to get Seddon on its feet again. Mr Walker would become chief executive of Seddon for not more than six months. During that time he would produce a business plan for the next three years. He would identify and source the necessary funds to start the business plan to ensure the company's viability.
After six months he would decide whether or not to buy the Seddon shares; and on buying the shares, how long it would take to replace or continue the overdraft facility with Barclays and to settle the payment of the loans and current account balances between IH and its subsidiaries.
While acting as chief executive and before buying the shares, he would continue to report in full to the IH board.
Redundancy payments on about 400 staff would be saved by retraining them on Government-funded schemes. He would build a new factory with seven bays at 60ft by 50ft and one 2 0 Oft by 3 0 Oft bay at £100,000, 80 per cent less than cost price because it was bought from a receiver in packing cases.
On the manufacturing side, Mr Walker's plans include fitting reconditioned parts into semi-constructed chassis at Seddon's Oldham plant, while still giving them new registration plates. They get a guarantee and a price tag £10,000 less than the new chassis price. A good price would be offered for the customer's old vehicle, and he would know the exact details of the reconditioning.
Vehicles would be offered withwithout engine, gearbox, back axle, and tyres, taking the customer's old vehicle and fitting his older parts into Seddon chassis.
He would buy new engines, gearboxes and axles that are out of date and fit them into new chassis. Prices would be "drastically" reduced. His plan also includes bringing in designers from Volvo, Scana and Daf to look at the Seddon range.
The factory would be open to the public and the media and within one year he predicts that 20 per cent of the market would be taken away from Volvo, Scania, Oaf and Mercedes-Benz.
With this package and many more ideas up his sleeve, Mr Walker started to look for financial backing to the tune of about £11m. A total of 48 banks and 37 financing and credit companies were approached over six months.
Some flatly refused to even consider giving financial aid, but others said they might be interested on one condition: that he funded an in-depth report on the manufacturer and a feasibil
ity study on his business plans. The report would cost about £300,000.
There was no way that that kind of money could be spared, especially as 1H appeared to want General Motors to buy Seddon. He could not risk paying out the money if IH turned round later and said "Sorry, it's sold."
But he stressed he felt no resentment over the refusals. "Banks are unlikely to pour money into a sinking ship, but the package I offered them was watertight. If the company's assets purchased did not realise the value quoted at the start, we had an insurance policy to pay for the shortfall."
The next avenue he explored was the Government. "I tried every Department connected with industry and transport, but the results were always the same. 'Thanks for writing, but no thanks, p.s. please keep us informed on any developments."
A letter from the Department of Industry on January 31, 1983 said: "There does seem to be some misunderstanding of the financial assistance which the Department can offer in these circumstances.
"If your proposals involve new capital investment or the development of a new vehicle, these are areas in which the Department might be able to provide some form of assistance. However, I think you will understand that we do not have the legal powers, nor indeed is it the Government's policy, to provide assistance simply for the acquisition of one company by another."
So there Mr Walker stays, hit to the ground by successive disappointments and let-downs. Enasa is ready to buy Seddon tomorrow, if the Spanish Government gives it the go-ahead.
General Motors is now out of the bidding and according to GM worldwide truck and bus executive Donald Atwood (CM July 2, 1983) only "very minimal" discussions ever took place be tween itself and IH.