While it wasn’t a big surprise that St Ives was disposing of its last remaining ‘commodity’ print operation, the identity of the purchaser raised eyebrows. Who was this Cogent B2B? The universal response was “never heard of them”.
Cogent B2B, it turned out, was a business owned by Kevin Dunstall. It claimed to provide “specialist support to SME’s [sic] across a wide range of sectors, through strategic planning and a deep understanding of our chosen sectors”.
Cogent B2B, states the firm’s website, “helps SMEs reach their full potential.”
Unfortunately for the employees and suppliers at Bradford, the actuality has turned out to be the opposite. St Ives Bradford was renamed Global MP under its new owner, but rather than reach these aspirations for global potential as an independent business, the firm is in administration, and its workers have been laid off.
For a £35m-turnover firm with a skilled workforce and blue-chip client base to unravel in the space of just nine months seems extraordinary.
Dunstall, it seems, quite simply had an inflated idea of his own capabilities as a so-called restructuring expert. Sources close to the company say he fundamentally failed to recognise the likely working capital requirements of a print business of this size. And rather than getting key suppliers on-side, he managed to alienate them. Promised payments did not materialise. Instead of building trust, goodwill was destroyed.
One former supplier to the business describes Dunstall as “a Walter Mitty character”. His world view certainly seems to differ from those who have dealt with him.
Just four months ago he trumpeted a new £7.5m finance facility agreed with Centric Commercial Finance, and stated: “We are committed to delivering on a fast-paced buy and build strategy, scaling the business rapidly, whilst continuing to provide exceptional standards of service to our clients.
“Our previous funding line was insufficient to support the scale of our planned acquisition programme and with the funding facility from Centric Commercial Finance in place, we now have a very strong working capital platform and significant increased headroom to enable us to take advantage of market opportunities.”
This statement in itself caused widespread derision, not least on the part of suppliers who were already being strung along when it came to payments.
Dunstall would have been far better, says the boss of one of the companies left out of pocket by the debacle, to have spoken of focusing on getting things at Global MP on track.
Centric has subsequently declined to comment about what went wrong with its relationship with Dunstall, citing client confidentiality.
Workers at Global MP have, understandably, vented their ire at St Ives for selling the business to a person with little substance behind them, and a questionable track record involving a number of failed businesses (see timeline).
However, an expert insolvency practitioner says of the case: “Sellers are not really required to do much at all other than ensuring they have done the best for their shareholders.”
St Ives chief executive Patrick Martell told PrintWeek: “We are disappointed that the business has failed. We did what we could to support it and were flexible all the way through with the financing.”
With hindsight, Dunstall’s £8m offer was almost too good to be true. Although he made the initial £3m payment by factoring the firm’s debtor book with his then-financier Bibby, St Ives has also ended up as one of the firm’s creditors, having deferred payments in an attempt to help the firm keep going.
Also with hindsight, would Martell and his team have done things differently?
“We were selling a business in a very tough market. You’re not going to have your choice of buyers,” he states. “He [Dunstall] offered a fair price for it and there was the possibility of the business continuing so we were very happy with that.
“It is not for us to do diligence on the buyer. The work, and the service and quality, were good. We were a happy customer.”
In all likelihood St Ives could have ended up closing the business itself in the absence of a willing buyer. But because Dunstall stepped in with his offer before the company was actively marketed, we will never know whether a more suitable buyer – Wyndeham owner Walstead being an obvious candidate – or even an MBO team, could have emerged to take the business on.
At least Martell has spoken out. Dunstall has been conspicuous by his absence in PrintWeek’s pages over the past few weeks as the situation at Global MP worsened. He has not responded to multiple requests for comment, nor did he provide any statement on the situation at the company prior to the fall into administration that has put almost 200 people out of work, including the separate workforce at sister company Global MP Mailing, which operated out of the same site.
Ignoring PrintWeek, though, will not make Dunstall’s responsibilities as a director go away.
“Nobody has closed the business except Kevin. He’s responsible and out of his depth,” says one supplier.
“In a funny way, I wanted to believe what he had to say. He was relatively young, and ambitious. But early on I realised he was talking so much hot air. This is a game for the big boys. It’s a tough market,” notes the supplier.
Just how tough is perhaps evidenced by the fact that the St Ives work previously produced in Bradford has been absorbed by the market with barely a ripple.
Whether Dunstall will be personally out of pocket as a result of this shambles remains to be seen. When he acquired Prospect Mailing Services last November (having placed the company into administration himself) he gave personal guarantees to the tune of £400,000 for the phased payments required. The payment schedule runs until August.
And HMRC, owed more than £370,000 by Prospect, is also likely to take an interest in events at a related company.
Incredibly, Dunstall’s name is now being linked with a web printer based in the South East, but those left out of pocket are hoping he will never be seen in print again. One of the unpaid victims of his hubris says: “He bit off more than he could chew. He wasn’t honourable, and he wasn’t experienced. And a lot of people have lost out as a result.”
TIMELINE
June 1998 St Ives acquires print group Hunters Armley. Its operations included direct mail sites in Leeds and Bradford
April 2009 St Ives begins a major phase of selling and closing non-core print operations under new chief executive Patrick Martell
June 2012 Boxco formed, Kevin Dunstall is director
July 2012 St Ives closes its Leeds direct mail site and consolidates the operations at Bradford. St Ives Direct Bradford subsequently posts a pre-tax profit of £1.2m on sales of £35m for the year to 31 July 2012
October 2012 Cogent B2B acquires Prospect Mailing Services. Kevin Dunstall becomes a director
December 2012 Kevin Dunstall is appointed as a director of Griffin Direct Marketing
September 2013 St Ives Direct Bradford sold to Cogent B2B for £8m – a £3m initial payment followed by £5m over two years
November 2013 Griffin Direct Marketing wound up. Dunstall places Prospect Mailing Services into administration. The business is subsequently acquired by Global MP
January 2014 Prospect Mailing Services’ unsecured creditors are owed £1.4m
February 2014 Boxco dissolved. Global MP managing director Jim McKie leaves the business. He joins York Mailing
March 2014 Global MP gains new £7.5m funding deal with Centric Commercial Finance. New company Global Media Procurement set up by Kevin Dunstall. St Ives says it is taking a cautious approach to the outstanding amount owed by Cogent B2B for Bradford, and has not written it up to its balance sheet. Instead, it is accounting for it as and when it receives it
June 2014 The situation at Global MP reaches crisis point. Wyndeham owner Walstead Investments poised to buy the business out of administration, but is unable to complete its commercial review
July 2014 Global MP goes into administration. Walstead acquires various pieces of Global MP’s equipment from Close Brothers Asset Finance, including two 32pp short-grain web presses. Global MP Mailing employees still in limbo
INDUSTRY REACTION
Perspectives on Global MP’s demise
Mark Scanlon, chairman, Walstead Investments
It was our second attempt to save the business following an offer earlier in the year that wasn’t taken further. We were in a good position to save the company, but we were unable to do so.”
Grant Penfield, managing director, Druckfarben
From day one he was under-financed, that’s why it’s gone down so quickly. He had a lack of experience and knowledge of the industry. There were some really good employees there – where are they going to go?”
Employee
Griffin and Prospect staff had already been shafted. When we were told that Global MP was going into administration we felt like crying.”
‘Wyndeham all the way’
I can only hope that the fantastic skilled workforce (you know who you are by the way) seek sense and find pastures new, and make a brighter better future for yourselves. You deserve so much more. Premier League players playing for a Vauxhall conference side.”
Nigel Day, managing director, Stora Enso
It does seems rather premature and very sad that this business has failed so quickly. Employees have lost out again.”
Former Global MP manager
He [Kevin Dunstall] is actually not a bad guy. He’s got so much enthusiasm. But he tells so many stories he meets himself on the way back. He didn’t understand the working capital requirements of the business – in his mailing background everything was delivered to him, he didn’t have to buy expensive things like paper. Fundamentally, it was a great business and would still have been if Kevin had stuck to basic principles – keep people informed and stick to payments.”
