Race is on for Celsius assets

By Elaine Watson

- Last updated on GMT

Related tags: Frozen food

Race is on for Celsius assets
The race is on to sell the remaining assets of cold storage and distribution firm Celsius First after Yearsley Group snapped up depots in Glasgow,...

The race is on to sell the remaining assets of cold storage and distribution firm Celsius First after Yearsley Group snapped up depots in Glasgow, Grimsby and Wisbech, plus a managed distribution contract run out of a depot at Hams Hall near Birmingham.

Sources close to Celsius said a clutch of logistics firms including Yearsley, Christian Salvesen and Innovate Logistics had been "sniffing around" the business, which went into administration last month.

The firm, which handles business for a clutch of blue chip names including Heinz, Young's Bluecrest, Pinguin Foods, Garden Isle Frozen Foods, Apetito and Unilever, employs 259 staff at the four depots still up for grabs, at King's Lynn, Bristol, Hoddesdon and Stratford.

The collapse of Celsius First, which blamed "significant losses" on reduced demand for frozen food storage and price competition for its problems, could "throw a spanner in the works of some big names in the industry" unless a buyer for the remaining depots is found rapidly, sources close to the troubled firm have warned.

What happens now depends on how strong a stomach the banks have, said British Frozen Food Federation director general Alf Carr.

"I am fairly confident a buyer will be found, but it depends how long the administrators can keep it going. Ultimately, its problems came down to a lack of margin rather than volume."

He added: "There is huge pressure on suppliers and inevitably, that has cascaded down to the logistics providers. In this environment, you have to concentrate on specific areas to succeed. You can't be all things to all men."

As to what tipped Celsius First over the edge, one industry source said: "Rising energy costs are a factor, but I suspect the impending change of ownership at Birds Eye made the banks edgy."

He added: "They spent £14M on building a huge automated depot at Grimsby a few years ago based on contracts with big players like Unilever. But things have changed since."

Stephen Oldfield, joint administrator at Pricewaterhousecoopers, said he was nevertheless confident of selling the rest of the business as a going concern owing to its strong reputation and blue-chip customer base.

Celsius First (formerly known as Frigoscandia), was sold by Denver-based Prologis in December 2003 to a consortium run by its management, Oregon Capital Partners and Bank of Scotland Corporate Banking.

At the time of the takeover, its sales topped £65M; however, they are since understood to have dropped to less than £50M.

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