Tiphook

Last updated

Tiphook PLC
Company type Public limited company
IndustryTransport
Founded1975
Defunct1997
FateDivested
Successor TIP Trailer Services, Cargowaggon
Headquarters London, England, UK
Key people
Robert Montague
A Tiphook rail intermodal freight well wagon at Banbury station in Banbury, United Kingdom in 2001 Banbury box car 2001 1st.png
A Tiphook rail intermodal freight well wagon at Banbury station in Banbury, United Kingdom in 2001

Tiphook PLC was a United Kingdom headquartered transport services company that was registered on both the London and New York stock markets. It was once a constituent of the FTSE 100 Index and became the world's second largest marine container leasing business in the 1990s. [1]

Contents

Tiphook was established by Robert Montague in 1975 with the goal of capitalising on the transition towards ISO-based intermodal containerised based logistics. It focused on the leasing of containers and trailers to serve this expanding sector and quickly proved to be quite lucrative, and thus the company entered into the provision of other services, such as maintenance, as well as growing internationally. Throughout the 1980s, Tiphook frequently acquired various other companies, issuing shares and taking on debts in order to rapidly expand, yet the value of some of these acquisitions were subsequently called into question. While the company continued to be profitable into the early 1990s, it had built up a substantial debt burden that was leveraged upon its assets, the value of which dropped considerably as more containers became available on the market.

In the early 1990s, Tiphook's financial situation sharply declined as its assets depreciated sharply and questions over its accounting practices were raised by creditors; its expansion into the North American market had US accounting practices applicable, under which the condition of the company led to a technical, and then actual, default in its debt coverage. As a result, the company underwent drastic restructuring, Montague and many senior figures were pushed out, and Tiphook was broken up to pay off its debts during the mid-1990s. The rail leasing arm of the business was spun out in 1996 and briefly traded under the name International Wagon Services before being acquired by General Electric (GE) and integrated into its European rail leasing business.

Early years

The origins of Tiphook are closely associated with its founder, Robert Montague. Prior to creating the business in 1975, Montague had worked at the multinational fuel conglomerate Esso and managed his father's transport business. [2]

Tiphook took advantage of a major shift in global transport practices, under which the traditional model of moving loose cargoes was being replaced by the use of ISO-based intermodal containerised based transportation systems. This transition resulted in customers and transport companies requiring more flexible business solutions, resulting in Tiphook having two basic service offerings, these being the supply of leased ISO containers, and of leased trailers (both road and railway) The company supplemented this initial model with value-added services including maintenance and trans-border clearance. Tiphook expressed an interest in entering various business sectors, including the operation of Britain's railways. [3] [4]

Throughout the 1980s, Tiphook sought to expand rapidly via multiple acquisitions. It frequently issued shares to raise funding for purchasing other companies, and often took on their existing debts. Some of these acquisitions, such as that of that Barclays Bank-owned Trailerent Ltd in 1989, referred to the Competition Commission. [5]

Perhaps the biggest takeover bid made by the firm was launched in May 1989, when Tiphook attempted a $824 million bid of rival logistics company Sea Containers, which was vigorously opposed by its founder James Sherwood. [6] Amid the process, Tiphook's management alleged that Sherwood had an authoritarian management style, while Sherwood issued his own allegations of irregularities in filings with the Securities and Exchange Commission. Sea Containers' Shareholders ultimately backed Sherwood's position, who had proposed asset sales and a restructuring to win favour, leading to Tiphook's acquisition ultimately failing through. [6]

As a consequence of its expansive strategy, Tiphook accumulated relatively high levels of debt, which were assured to lenders through assets on the business' balance sheet. During the early 1990s, concerns were raised by these lenders over the potential overvaluing of some of these acquisitions. [7] Despite these concerns, as late as 1991, Tiphook was widely regarded as a successful and highly profitable business. [8] [9] The company had intentionally structured its growth to avoid becoming overly dependent upon any single country or customer, an approach which supposedly also limited its exposure to recessionary pressure. [8]

Difficulties and collapse

Tiphook owned the majority of its assets, which were mainly containers and road trailers. As the popularity of containers increased, their cost of manufacture dropped to around $2,000 per 40 ft ISO unit. This cost was below the asset value logged on Tiphook's book, [2] [10] which resulted in a technical default in Tiphook's loans under US Accountancy laws. Shortly after this was recognised, a class action by US-based shareholders was proposed, as the published accounts were now in doubt. [11] [12] Independent accountants were commissioned by the banks who had lent money to Tiphook studied the company's books indepth. [7] Tiphook's practices regarding depreciation, while compliant with UK law at that time, was subject to criticism. [13] [14] Furthermore, the company had committed to £327 million of capital expenditure on new trailers through to 1998, a considerable expense on top of Tiphook's various outstanding commitments. In response, Roger Braidwood, Tiphook's finance director, resigned from his position. [12] [15]

Further negative publicity for the company came in the form of revelations about Montague himself, being one of the highest-paid executives in Britain at that time, having being paid a salary of £851,000 in 1992. [12] Actions taken by Montague, such as his purchasing of company shares using loans from the company itself, and luxurious lifestyle, such as 24-hour access to both a chauffeur-driven Bentley and a Hawker Siddeley HS124 corporate jet, also led to criticism. [10] [2] By late 1993, Tiphook and its directors, which included Charles Powell, had come under severe shareholder pressure. [12] [16]

The company resultantly agreed to reduce its debts by selling off its profitable containers business, eventually agreeing terms with Transamerica Corporation in exchange for £700 million in February 1994, although this was £77 million less than had originally been agreed. [17] [18] That same month, Tiphook announced that it had incurred interim pre-tax losses of £180 million, accompanied by numerous write-downs and provisions. [10] The company's performance being hindered by a wider economic factors, including an economic recession, that had led to a downturn in demand for its leasing services. [18] In April 1994, it was announced that Tiphook would be delisted from its secondary listing on the Hong Kong Stock Exchange. [19]

In June 1994, Tiphook appointed former BOC finance director Ian Clubb as its new chairman with the primary priority of stabilising the business. [20] [21] Several changes were quickly enacted, numerous executives departed the company including Montague, who was compelled to resign in December 1994; there were numerous complaints of allegedly excessive levels of remuneration paid to senior figures at this time. [22] Furthermore, the business was rebranded as Central Transport Rental plc. [20] Amongst other consequences, these changes resolved the class action. [11]

Aftermath

In May 1996, Tiphook Rail was sold in a management buyout and renamed International Wagon Services Ltd. [23] During 1998, it was purchased by GE Equipment Services to form part of its pan-European rail services business Cargowaggon. [24]

The residual company was branded as Tiphook Trailers. [25] By 1997, this entity operated a fleet of 22,500 trailers at 132 depots in nine European countries. In July 1997, it was sold in 1997 to GE Capital, who merged it with its existing TIP Trailer Services rental and leasing company. [26]

Shortly following his departure from Tiphook, Montague was declared bankrupt in 1994, having accumulated personal debts of £30 million. [27] [28] After release from his legal obligations, he started pan-European transport equipment leasing company Axis Intermodal in 1995. Montague promoted the venture's business model as being fundamentally different to Tiphook's, such as by not owning any of its containers and being more risk-adverse. [2] During 2004, this business was folded into Intermodal Resources, which was subsequently listed on the Alternative Investment Market (AIM). [29] [10] By 2009, the company had adopted the Sea-Axis brand. [1]

In light of the collapse of Tiphook, along with other events such as the Robert Maxwell scandal at the Daily Mirror, the British Government responded with new legislation that pertained to corporate governance practices. [10] [2]

See also

Related Research Articles

<span class="mw-page-title-main">Containerization</span> Intermodal freight transport system

Containerization is a system of intermodal freight transport using intermodal containers. Containerization, also referred as container stuffing or container loading, is the process of unitization of cargoes in exports. Containerization is the predominant form of unitization of export cargoes, as opposed to other systems such as the barge system or palletization. The containers have standardized dimensions. They can be loaded and unloaded, stacked, transported efficiently over long distances, and transferred from one mode of transport to another—container ships, rail transport flatcars, and semi-trailer trucks—without being opened. The handling system is mechanized so that all handling is done with cranes and special forklift trucks. All containers are numbered and tracked using computerized systems.

<span class="mw-page-title-main">Intermodal container</span> Standardized reusable steel box used for transporting goods

An intermodal container, often called a shipping container, or a freight container, (or simply ”container”) is a large standardized container designed and built for intermodal freight transport, meaning these containers can be used across different modes of transport – such as from ships to trains to trucks – without unloading and reloading their cargo. Intermodal containers are primarily used to store and transport materials and products efficiently and securely in the global containerized intermodal freight transport system, but smaller numbers are in regional use as well. It is like a boxcar that does not have wheels. Based on size alone, up to 95% of intermodal containers comply with ISO standards, and can officially be called ISO containers. These containers are known by many names: cargo container, sea container, ocean container, container van or sea van, sea can or C can, or MILVAN, or SEAVAN. The term CONEX (Box) is a technically incorrect carry-over usage of the name of an important predecessor of the ISO containers: the much smaller steel CONEX boxes used by the U.S. Army.

<span class="mw-page-title-main">Intermodal freight transport</span> Cargo transport using multiple containers

Intermodal freight transport involves the transportation of freight in an intermodal container or vehicle, using multiple modes of transportation, without any handling of the freight itself when changing modes. The method reduces cargo handling, and so improves security, reduces damage and loss, and allows freight to be transported faster. Reduced costs over road trucking is the key benefit for inter-continental use. This may be offset by reduced timings for road transport over shorter distances.

<span class="mw-page-title-main">Freightliner Group</span> Rail freight and logistics company

Freightliner Group is a rail freight and logistics company headquartered in the United Kingdom. It is presently a majority owned subsidiary of the American holding company Genesee & Wyoming.

<span class="mw-page-title-main">Penske Truck Leasing</span>

Penske Truck Leasing Co., L.P. is a joint venture of Penske Corporation, Penske Automotive Group, and Mitsui & Co. Headquartered in Reading, Pennsylvania, the company was founded by Team Penske owner Roger Penske on December 1, 1969. It is Penske’s flagship and best known division. The firm serves customers in North America, South America, Europe, Asia, and Australia; among its services are full-service commercial truck leasing, truck fleet maintenance, truck rentals, and used truck sales. The company currently employs more than 40,000 workers worldwide and operates and maintains a fleet of more than 450,000 vehicles. Brian Hard is the president and CEO of the company.

<span class="mw-page-title-main">COSCO Shipping Development</span> Chinese financing and logistics firm

COSCO Shipping Development Co., Ltd., stylized as COSCO SHIPPING Development is a financial services company based in Shanghai, China.

Sea Containers was a Bermudan registered company which operated two primary business areas: transport and container leasing.

<span class="mw-page-title-main">GE Capital Rail Services</span> Former American railcar leasing company

GE Capital Rail Services, also known as GE Railcar, or GE Railcar Services Corporation was a business unit of GE Capital, a division of General Electric. It was a distinct business unit from General Electric's railway locomotive manufacturer.

<span class="mw-page-title-main">Swift Transportation</span> Logistics company

Swift Transportation is a Phoenix, Arizona-based American truckload motor shipping carrier, part of Knight-Swift. With over 23,000 trucks, it is the largest common carrier in the United States. In 2017, Swift merged with Knight Transportation, also of Phoenix.

The Greenbrier Companies is an American publicly traded transportation manufacturing corporation based in Lake Oswego, Oregon, United States. Greenbrier specializes in transportation services, notably freight railcar manufacturing, railcar refurbishment and railcar leasing/management services. The company is one of the leading designers, manufacturers and marketers of rail freight equipment in North America and Europe. It also has operations in South America, Poland, Romania and Turkey. Greenbrier is a leading provider of railcars, wheelsets, parts, management, leasing and other services to the railroad and related transportation industries in North America. As of August 31, 2021, Greenbrier employs 15,400 people across its global operations. Formed in 1981 and publicly traded since 1994, the company generates revenues of US$3.49 billion.

<span class="mw-page-title-main">Well car</span> Type of railroad car

A well car, also known as a double-stack car, is a type of railroad car specially designed to carry intermodal containers used in intermodal freight transport. The "well" is a depressed section that sits close to the rails between the wheel trucks of the car, allowing a container to be carried lower than on a traditional flatcar. This makes it possible to carry a stack of two containers per unit on railway lines wherever the structure gauge assures sufficient clearance. The top container is secured to the bottom container either by a bulkhead built into the car — possible when bottom and top containers are the same dimensions, or through the use of inter-box connectors (IBC). Four IBCs are needed per well car. In the terminal there are four steps: unlock and lift off the top containers of an inbound train, remove the bottom containers, insert outbound bottom containers, lock assembly after top containers emplaced. Generally this is done car-by-car unless multiple crane apparatus are employed.

<span class="mw-page-title-main">Husa Transportation Group</span> Group of transportation/logistics companies

Husa Transportation Group is a group of railfreight, logistics and rail services companies founded in 1998, the group's main business arm on foundation was ACTS Nederland BV (ACTS), founded 1989, an open access freight operator in the Netherlands.

<span class="mw-page-title-main">ERS Railways</span> Railway company

ERS Railways is a rail freight company presently owned by the Swiss rail freight company Hupac.

Macquarie European Rail is a rolling stock company (ROSCO). It is presently owned by the French railway leasing entity Akiem.

SNCF Logistics was the division of the SNCF group responsible for freight transportation and logistics.

GE Capital Rail Services was a European railway services company owned by GE Capital and headquartered in Amsterdam, Netherlands. The company was formed in 1998 through the acquisition and merger of the leasing firms Cargowaggon and Tiphook.

AS Operail is a railway logistics company located in Tallinn, Estonia. Its sole shareholder is the Government of Estonia.

<span class="mw-page-title-main">Container chassis</span>

A container chassis, also called intermodal chassis or skeletal trailer, is a type of semi-trailer designed to securely carry an intermodal container. Chassis are used by truckers to deliver containers between ports, railyards, container depots, and shipper facilities, and are thus a key part of the intermodal supply chain.

A pocket wagon is a freight wagon that has been specially designed for the transport of truck semi-trailers. This wagon belongs to the group of flat wagons in special design with bogies and is used in combined transport (CT). The name of these freight wagons comes from the fact that between the narrow longitudinal girders on the outside and also lengthways between the bogies, the so-called pockets are located, in which the wheels of the semi-trailers are particularly low. For flexible use in CT, pocket wagons have hinged latches with ISO spigots on the solebar, so that containers and swap bodies up to 45 ft can be accommodated. As a flat wagon, it bears the UIC generic letter S and, since it is intended for the transport of road vehicles on one level, the code letter d. Since it is also possible to transport containers in a pocket wagon, it bears the UIC generic mark Sdgs. In this context, the code letter g stands for "containers up to 60 feet" and the lower case s for the permitted speed of up to 100 km/h (62 mph). The wagons have a yellow triangle with a black P on the long side. The first pocket wagons were built in Germany as early as 1972 and further developed according to requirements.

References

  1. 1 2 "Ex-Tiphook chief makes box leasing comeback". Noble Container Leasing. 17 December 2007. Archived from the original on 25 July 2009.
  2. 1 2 3 4 5 "Selling an old wine in new containers". The Guardian . 1 May 2005.
  3. ↑ "Commons Chamber: Volume 138". Hansard. 28 July 1988.
  4. ↑ "Freightliner's 50 years". Railways Archive. 23 December 2015. Retrieved 16 April 2019.
  5. ↑ "Tiphook plc and Trailerent Ltd: A report on the proposed merger" (PDF). Competition Commission . May 1990. Archived from the original (PDF) on 25 October 2007.
  6. 1 2 Morgan, Oliver (7 May 2006). "Sea Containers grabs at a lifeline". The Observer.
  7. 1 2 Hellier, David (7 November 1993). "Accountants to look into Tiphook deal". The Independent.
  8. 1 2 "Tiphook's profits rise by 129%". Commercial Motor. 11 July 1991.
  9. ↑ Warner, Jeremy (21 November 1993). "City: Tiphook's stunt deserves benefit of the doubt". The Independent.
  10. 1 2 3 4 5 Waller, Martin (14 August 2021). "Founder of Tiphook returns to market". The Times. Archived from the original on 11 June 2011.
  11. 1 2 "(untitled)". 12 December 1994.[ dead link ]
  12. 1 2 3 4 Murray, John; Hellier, David (10 October 1993). "Search on for new Tiphook chief" . The Independent . Archived from the original on 21 June 2022.
  13. ↑ Jones, Michael (2011). Creative accounting, fraud and international accounting scandals (PDF). John Wiley & Sons. p. 55.
  14. ↑ Hellier, David; Durman, Paul (17 July 1993). "Tiphook loses City adviser: Merchant bank resigns after container group consults rivals on strategic moves". The Independent.
  15. ↑ Murray, John (17 August 1993). "Tiphook finance chief quits: Transport group tries to restore investors' confidence". The Independent.
  16. ↑ "Tiphook stock skyrockets on rumors of takeover". Journal of Commerce. 25 July 1993.
  17. ↑ "Company News; Transamerica to Buy Tiphook Unit for $1.1 Billion". New York Times . 15 February 1994.
  18. 1 2 Murray, John; Hellier, David (12 January 1994). "Tiphook agrees to pounds 757m sell-off: Troubled group's future still hangs in the balance as shareholders ponder sale of containers division". The Independent.
  19. ↑ "Tiphook to abandon secondary listing". South China Morning Post. 21 April 1994.
  20. 1 2 Willcock, John (11 October 1994). "Two leave Tiphook under 'fresh approach' by new chairman" . The Independent. Archived from the original on 21 June 2022.
  21. ↑ Blackhurst, Chris (31 August 2010). "UK: Who Lets Pay Run Away?". managementtoday.co.uk.
  22. ↑ "Tiphook Founder Is Out". New York Times. 22 December 1994.
  23. ↑ "Tiphook KPA Bogie Hoppers". Pauls Wagon Pages.
  24. ↑ "Inside Industry". Railway Gazette International. 1 June 1998.
  25. ↑ "Central Transport Rental Group Plc". Business.com. Archived from the original on 22 November 2008.
  26. ↑ "GE Capital Plans to Buy British Trailer Rental Company". New York Times. 30 July 1997.
  27. ↑ "Tiphook boss in cash crisis". Commercial Motor. 22 September 1994.
  28. ↑ Willcock, John (20 September 1994). "The mystery is where the missing Montague money went". The Independent.
  29. ↑ Waples, John; Durman, Paul (9 May 2004). "Failed Tiphook tycoon seeks return to City". The Times .
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.