Powell Logistics Inc.

Executive Summary

The trucking industry is now struggling with the depressed reality of a global economic downturn and razor thin profit margins. The new millennium has eclipsed the glory days of dirt cheap diesel fuel and a very advantageous Canadian to American currency disparity. John Powell, president and founder of Powell Logistics Inc. (PLI), has built up a substantial business over the last 30 years and he has excelled in the profitable less-than-load (LTL) transport service; however, PLI’s slow manoeuvrability in the motor-carrier market is now negatively impacting their profit margins and they are unable to effectively cope with the inverse relationships between their increasing expenses and the consumer demands for cheaper transport rates.

PLI’s hardship in the current motor-carrier environment is analogous to an AZ truck trying to perform a U-Turn in order to reach a new destination; it requires the right location, the correct timing and a qualified person to execute the manoeuvre. With regards to location, PLI is renting two buildings in the expensive city of Toronto, and a proposed plan to invest 10 million dollars into an expansion/integration project is very unlikely. Secondly, the timing of PLI efforts to streamline and expand their operations is long overdue; as competing companies are already providing niche services where PLI is unable to compete comparatively. Lastly, founder and president John Powell is on his way to retirement, and the qualified person to ‘steer the company in the right direction’ is still unknown.

We suggest PLI enters into an aggressive debt restructuring program and sell off toxic assets, which would put PLI in an attractive financial position for interested parties looking to buy the company outright, (for a better price), or to merge with PLI and take advantage of their expansive consumer base and their (LTL) expertise.

Key Assumptions

• The depressed economic environment will continue to ravage the...