Magazine distributors collapse
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• Specialist newstrade distributor Magazine Distribution of Hertford has ceased trading after unsuccessful attempts to get extra funding for the business — and its associate company, Time Sensitive Deliveries (TSDL), has also called in the receiver making 110 employees redundant.
Time Sensitive Deliveries (TSDL) distributes weekly tides such as Anglers Mail, New Scientist and Investor's Chronicle. MDL specialised in distributing monthly titles, among them Mother & Baby, Home & Freezer Digest, Slimming and Puzzler.
TSDL called in receiver Ernst & Young this week after battling to survive following the collapse of MDL last week.
MDL had called in the receiver on 22 November after attempts to persuade investment company Si to pump more money into the operation failed_ MDL claimed that 3i had not ruled out investment in TSDL if another backer had been found.
One of MDL's assets, now with the receiver, is a 51% shareholding in TSDL. The value of this is unknown but hauliers who are creditors of MDL have decided not to turn their debts into equity.
Several hauliers have told CM they are owed money by MDL for distribution work. FH Roberts & Sons of Southampton says it is owed 240,000, but believes its chances of getting the money is "next to nothing".
Bristol-based R&S Transport says it is owed 213,000. It says it spent 235,000 on two new 3.5-tonne vans to handle MDL work two weeks before the company was wound up.
Other MDL debts are claimed to include 27,000 owed to Goddards Transport; 212,000 owed to Richards of Ipswich; £12,000 owed to Mainline Haulage and 228,000 owed to MCK of Cambridge. MCK stopped working for MDL three months ago and boss Peter Nancollis says: "All we want now is our money back."
Mainline Haulage picked up a Midlands contract formerly held by Liverpool-based Bibby Distribution Services.
Explaining why Bibby relinquished the contract, group spokesman Graham Wilmer says: "Bibby carried out its obligations to MDL in accordance with our contract. MDL, however, was unable to meet the contractually agreed payment terms. We parted company in consequence." But Mainline boss, Ron Aiken, says he was unaware of this when MDL granted him the contract. "MDL told us it was dissatisfied with Bibby's service," says Aiken.
Martin says he relinquished the contract with Bibby after a dispute about prices.
In a bid to save the business, on 12 November Martin increased his rates by 10%, and share-owning hauliers working for TSDL were asked to accept a 20% rates cut, to which Martin says they agreed.
Many hauliers working for Tsui. have been shareholders for some time. At the end of March a debt of 2850,000 was converted into equity by selling shares.
Webbs of Swindon deliver for TSDL along the M4 corridor to the Severn Bridge, and trunks magazines from Enfield down to the West Country and Wales. Owner John Webb, a shareholder in TSDL, says his firm does 20% of ISDL's work. "If the company folds the position for us will not he healthy," says Webb.
The test for TSDL's survival was whether it could retain its customers following MDL's collapse. Martin believed a cash injection by someone prepared to buy MDL's 51% shareholding in TSDL might encourage 3i to reconsider investment. Following the announcement of MDL's collapse, a weekly part-work publisher withdrew its business from TSDL.
"Following the collapse of MDL cash flow dried up immediately," says Martin. "As someone said, you can fail to make profits many times but YOU run out of cash only once. I am now unemployed and will present myself at the benefit office.
"The best company the magazine distribution industry has ever seen is dead."