City Link (company)

City Link was a British next day courier company, operating from 1969 to 2015. It was based in Coventry, West Midlands with offices in other parts of the country. On 24 December 2014, the company entered administration. Ernst & Young (EY) was appointed as the administrator, and immediately ceased accepting parcels from customers. City Link officially ceased trading on 1 January 2015.

History

City Link was founded in 1969 by two minicab drivers, Harry Hammond-Seaman and Jo Burt, as a subsidiary of Orbit Cargo Services Ltd, to provide a cross-town transfer service for British Rail's Red Star Parcels. At the time, Red Star only operated on direct passenger trains, so a sender in Brighton could not dispatch a parcel to Norwich, as a transfer had to be undertaken in London between Victoria Station and Liverpool Street station.

In addition, the Red Star service was limited to station-to-station only. Following increasing demand from its customers, City Link established a nationwide network of delivery agents to collect parcels from the local station and deliver them to the consignee.

With one depot and three employees, the company had a growing customer base, turning over £100 thousand per year. Yet by 1971, profits were derisory, and resultant cash-flow difficulties meant that Orbit Cargo decided to sell the business.

Acquisition of Target Express

Exactly one year after Rentokil Initial announced its City Link franchise buyback scheme, it finished negotiations with the shareholders of Target Express to purchase the company on 20 November 2006.[2] Target was officially acquired, and taken over by City Link on 1 March 2007.

As a part of its merger with Target Express, City Link was planning to close 42 of the 110 combined branches in the first half of 2008, to provide a single integrated network. However, at the end of February 2008, managing director Petar Cvetkovic announced a suspension of further integration of Target Express depots until January 2009.

The merger of the two units proved problematic, particularly due to depots running different computer systems,[3] damaging profits at parent company Rentokil Initial.[4] Rentokil Initial turned down several offers for the loss making unit in May 2008, instead intending to turn around City Link's fortunes.[5]

By November 2011, City Link was still losing money, annual figures released in July show losses growing to £17.8 million, and revenues down 13.5%,[6] and a November 2011 trading statement stated losses of £25 million in the first nine months.[7] Rentokil Initial sold the business to corporate restructuring firm Better Capital in April 2013.[8]

Administration

Late on 24 December 2014, City Link went into administration, and stopped accepting parcels, whilst its administrators Ernst & Young carried out an assessment of the company.[9]

On 25 December 2014, the RMT union was reported to have demanded "urgent talks" with the government and administrators about the collapse of the company. The government said it was unable to intervene in the administration process, although the business secretary said he would meet the union. RMT demanded government talks over the collapse.

On 31 December, the company announced that 2,356 jobs would be lost, leaving only 370 staff employed.[10] The collapse of City Link also left 1,500 self employed drivers out of pocket, with no recourse or protection. A petition was created by the sub contractors to try to get the collapse of City Link debated in the House of Commons.

Rescue offer rejected

BBC News reported on 31 December 2014 that the administrators had rejected an offer from an unnamed consortium, claiming that the possible buyer "offered no money up front and significantly undervalued the assets to be acquired". After confirmation that the rescue had failed, Mick Cash, general secretary of the RMT union, said: "Pulling the plug on any efforts to save City Link is a disgraceful and cynical betrayal that will wreck the lives of our members, many of whom are owed thousands of pounds".[11]

founded	1969
defunct	1 January 2015
fate	Administration
type	Limited company
location	Coventry, England
key people	David Smith (Managing Director) Robert Peto (Finance Director)
industry	Courier
owner	Better Capital
products	Freight Forwarding Services Logistics Services
num employees	2,727
revenue	£306.9 million GBP(FY 2011)
homepage	https://web.archive.org/web/20140301143242/http://www.city-link.co.uk:80/ (Archive copy)

City Link (company)

History

Acquisition of Target Express

Administration

Rescue offer rejected

Reports

External links

References