Custom Bus was a local manufacturer that built high quality buses primarily for the NSW Government and the Australian transport industry. It had a turnover in excess of $50m per annum.
Background
The company had a poor history of falling into financial difficulty having previously been placed into administration and then sold to the current owners through the voluntary administration process.
The company had attempted in the months leading up to our appointment as administrator to restructure and seek additional funding both through financiers and their private equity backers. Unfortunately, they failed in finding a financier and could not reduce the ongoing losses in the business resulting in the appointment as Administrator.
At its peak, in 2016, it was the second largest bus manufacturing business in Australia. At that time, approximately, 5000 buses which had previously been purchased from the business was operating in Australia.
Custom Bus was a local manufacturer that built high quality OEM buses primarily for the NSW Government and the Australian transport industry. It also provided aftermarket services, such as repairs and maintenance to its clientele. It had a turnover in excess of $50m per annum.
The company had been experiencing losses identified that the key reasons for these losses were caused by:
- Poor management with respect to cost controls;
- Poor quality of manufacturing resulting in numerous reworks and rectification works being undertaken which were required following quality control inspection; and
- A corresponding reduction in revenue.
The business had also suffered some market share loss as a result of growing competition from overseas manufacturers.
The company had circa 160 employees and was based at Villawood NSW and Wingfield SA at the time the appointment of Administrator.
How did we assist
Following the appointment of Administrator, we were presented with a business that had minimal available cash, a factored debtor book and numerous incomplete buses that required labour and parts for completion.
Key creditors of these parts had large exposures and had also been previously exposed to the prior administration process. It was essential that the buses be completed to generate cash to allow the business to continue to trade during the administration process, save jobs and allow Administrators to find a buyer.
Some of the key creditors had insisted upon extra payments due to their high exposure to the business. This hampered our ability to complete the buses to generate further cash. An urgent support package was provided by the key chassis owners and the main customers. This allowed the Administrators to run a sale process and find a buyer and also work with the financier to stabilise the cashflow.
We received numerous calls from interested buyers for the business during the sale process, however, the ultimate buyer was Telfords, a division of the broader UK Dunn Group.
Outcome
Telfords was identified as the buyer, and the business sold to them allowing the operations to continue in both Sydney and Adelaide. The business continues to operate today.
