Better Capital acquires City Link for £1

Better Capital will invest £40m in the business to provide sufficient funding required by City Link to complete its turnaround plan. There was no fresh debt arranged as part of the deal.

Rentokil Initial has retained certain parent company guarantees, including close to £20m relating to leasehold properties.

The sale process consisted of an auction with a small number of bidders. Better Capital was eventually chosen as City Link's acquirer after three months. Negotiations were wrapped up in ten days in the last stretch of the exclusivity process.

Better Capital will back the existing management team as it continues to implement its turnaround strategy, invest in infrastructure and focus on new business.

Company
City Link, a UK courier services company, experienced substantial losses in the past five years. However, it reduced adjusted operating losses from £31m in 2011 to £26m in 2012. Q1 2013 performance continued to show an improved trading performance: the business posted an adjusted operating loss of £8.1m, an improvement of £4.6m against Q1 2012.

People
Alan Brown is the chief executive of Rentokil Initial. The City Link management team is led by David Smith.

Advisers
Equity - Macfarlanes, Simon Perry, Simon Beale (Legal); PwC, Rob Hunt, Andy Skinner, Nick Williams (Financial due diligence)

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