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.

For other uses, see Citylink (disambiguation).

City Link Limited
TypeLimited company
IndustryCourier
Founded1969
Defunct1 January 2015
FateAdministration
HeadquartersCoventry, England
Key people
David Smith (Managing Director)
Robert Peto (Finance Director)
ProductsFreight Forwarding Services
Logistics Services
RevenueDecrease £306.9 million GBP(FY 2011)
OwnerBetter Capital
Number of employees
2,727
Websiteweb.archive.org/web/20140301143242/http://www.city-link.co.uk:80/ (Archive copy)

History
Mercedes-Benz Sprinter in Plymouth in March 2009

City Link was founded in 1969 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 and following increasing demand from its customers, City Link established a nationwide network of franchised agents to collect parcels from the local station and deliver to the consignee. In June 1989, the company was acquired by Securiguard Limited.

On 20 November 2005, Initial City Link announced that as a part of its expansion programme, it would to buy back the franchises.[1] This was completed in March 2007, with the purchase of its largest franchisee, Tiger Haulage Ltd, which ran City Link's Welwyn Garden City, Hemel Hempstead, Barking, Birmingham, Worcester, West Bromwich, Reading and High Wycombe operations.

Acquisition of Target Express

Exactly one year after Initial City Link announced its 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 Initial 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 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]

Reports

The Telegraph website reported on 21 March 2015 that "City Link’s creditors are likely to see less than 2p in the pound on any money they are owed". MPs were expected to publish a report on the impact of City Link's closure on employment on 23 March 2015.[12]

References
  1. "Rentokil Initial profit deterioration slows". Forbes. AFX News. 3 November 2005. Retrieved 29 July 2008.
  2. "Rentokil to buy Target Express for 210 mln stg; to sell electronic security ops". Forbes. AFX News. 30 November 2006. Retrieved 29 July 2008.
  3. Osborne, Alistair (23 April 2008). "Rentokil chief delivers City Link blow". The Daily Telegraph. Archived from the original on 22 April 2008. Retrieved 29 July 2008.
  4. "City Link to hit Rentokil profits". BBC News. 28 February 2008. Retrieved 29 July 2008.
  5. Stiff, Peter; Robertson, David (3 May 2008). "Rentokil plans to hold on to City Link". The Times. London. Retrieved 29 July 2008.
  6. Ruddick, Graham (29 July 2011). "Rentokil still losing money on City Link business". The Daily Telegraph. London. Retrieved 20 January 2012.
  7. "Rentokil falls short on CityLink loss". The Independent. London. 8 November 2011. Retrieved 20 January 2012.
  8. "Rentokil sells City Link for £1 to Better Capital". BBC News. 29 April 2013. Retrieved 29 April 2013.
  9. "BBC News – City Link parcel delivery company goes into administration". BBC News. 25 December 2014. Retrieved 25 December 2014.
  10. "City Link announces 2,356 job losses after rescue talks fail". BBC News. 31 December 2014. Retrieved 1 January 2015.
  11. "City Link announces 2,356 job losses after rescue talks fail". BBC News. 31 December 2014. Retrieved 28 April 2020.
  12. Dakers, Marion (21 March 2015). "City Link administrators confirm suppliers will get almost nothing". Daily Telegraph. Retrieved 28 April 2020.
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