08.04.2004

Independent calls in the administrators

Norwich-based IAS, the third largest powered access rental company in the UK, called in the administrators yesterday. The company has been subject to acquisition rumours for several months as it struggled to cope with the cash effects of poor winter utilisation, low rates and high leverage.

Richard Philpott and Peter Rilett from KPMG Corporate Recovery were today appointed as administrators. Philpott, a KPMG Corporate Recovery partner said: “Unfortunately current over-capacity in the market has led to depressed prices and the company haa found itself under increasing trading and cash pressures. KPMG is currently working towards the financial restructuring of the business to secure all of the jobs and pursue a survival of the company in the true spirit of the Enterprise Act.”

Independent Access is headquartered in Norwich and operates seven other depots around the UK, including Manchester, Birmingham, Bristol, Gatwick, Glasgow, Leeds and Northampton with a total of around 100 employees.

The company is partly owned by 3I’s, the venture capital firm, and, unlike other access interests, is highlighted in the 3I portfolio. 3I was also a shareholder in the Meek Group, which called in the administrators late last year, prior to being acquired by the Platform Company. It also has an interest in Universal Access and most recently funded the management buy out of HSS.

This latest move continues the restructuring of the UK access business that started with the failure early last year of PAS, followed by the liquidation of Elevation in Ireland, the above mentioned administration of the Meek Group and the more recent takeover of UK Platforms by French manufacturer Haulotte.

JLG is the largest equipment supplier to Independent, followed by Terex-owned Genie Industries. Both companies are thought to have a degree of exposure and will be closely watching the administrators restructuring plans.

Vertikal Comment;
The ongoing spate of access rental company failures is unusual in the UK and reflects most significantly a new willingness by bank and finance companies to “pull the plug” on companies that default rather than allowing debt restructuring or payment holidays.

The question of over supply is often cited as the reason for such failures as Independent, and certainly this is the case for certain product groups. The tendency for many UK access rental companies to cut prices at the first sign of resistance or softness and then leave them low when demand picks up, however, is a major contributor.

The UK market for access equipment is by no means mature and still has plenty of growth potential, particularly with the new 'temporary work at height' regulations that are due to come into force.

The UK access rental (and cranes) sector, as in many other markets accross Europe, has also been very poor at marketing their products to a wider audience in order to develop and expand the market, preferring instead to chase existing users at the job site level, tempting contractors to change supplier mid-contract with lower rates.

If nothing else comes of these failures, hopefully the rental industry will get the message that an investment needs to be made in expanding the market. Low rates, if used at all, should be tailored as trials to bring new customers and users over to powered access, rather than to simply get a competitors machine thrown off an existing site.