Hill Hire up for sale while Lex says no
change

Despite HBOS-owned Hill Hire being reportedly up for sale, its
sister company Lex, the largest fleet leasing company in the UK, is
adamant that it will remain in the hands of its existing
owners.

Sources said that it would be unlikely that HBOS would sell a
subsidiary that it paid some £226m to completely acquire only two
years ago, and which has an 11 per cent share of the car finance
market.

Lex, which also has around 50,000 commercial vehicles, is
currently completing its assimilation,which started in 2007, of
Bank of Scotland Vehicle Finance’s (BoSVF) 65,000-strong fleet.

Nonetheless, HBOS is currently folding its SME asset finance
business into the bank’s general commercial team, a move that will
result in job losses and a possible downscaling of its SME asset
finance capability.

Last month The Sunday Times claimed that Hill Hire, one
of the UK’s largest commercial vehicle and trailer lessors with
around 21,000 vehicles in its fleet,is up for sale, and that
accountants had been hired as sale advisers. Andy Mitchell, Hill
Hire’s boss, refused to be drawn on the media reports. “I have
nothing to say – it is only rumour and speculation,” he said.

It is barely two weeks since Hill Hire’s ultimate parent, HBOS,
suffered an embarrassing undersubscribed rights issue and
consequent speculation regarding a takeover by a foreign predator.
In addition, Hill Hire’s immediate parent, Bank of Scotland
Corporate, is expected to reveal increasing impairments later this
month when the bank’s half-year results are announced. All of which
are classic formulae for shedding “non-core” elements.

The news, however, should not have come as much of a shock to
the industry given the state of the banking industry – and indeed
the haulage sector – in the current economic climate.

Yet Bradford-based Hill Hire has traditionally been viewed by
industry insiders as a well-run company. Mitchell, who has headed
Hill Hire since 2001, brought to the job a broad expertise in
finance and leasing, including time working at both Mercantile
Credit and Barclays. During his seven years with Hill Hire the
fleet has grown from 10,000 to 21,000 units.

During that time, he also grew the number of regional service
depots to 17 – all staffed with trained and accredited employees.
The company’s fleet includes a range of commercial vehicles from
3.5tn panel vans to 44tn top-weight trucks, including refrigerated
trailers. It buys around 1,000 vehicles a year and operates with a
mix of national customers and spot rental throughout its
network.

Mitchell has long been a critic of competitors who cut margins
to unfeasible levels to win business.

He has always stressed the need for commercial vehicle lessors
to continually re-invest in service infrastructure as a way of
differentiating themselves in the marketplace and avoid dependence
upon merely quoting the lowest rate. For example, many of Hill
Hire’s workshops run nightshifts to keep vehicles available and
ready to rent.

TIME LINE: HILL HIRE

1999: Hill Hire absorbed into Bank of Scotland
at the same time as
other subsidiaries, Capital Bank, Bank of Wales and British
Linen
Bank, are re-branded to that of the bank.

2001: Andy Mitchell joins Hill Hire as managing
director.

2002: Major deal won to supply 500 new 13.6m
tri-axle
curtainsiders costing around £15m for MFI on a seven-year
contract
hire arrangement.

2005: Dave Barlow and John Rice join the board
after being
recruited from TransAmerica Leasing.

2006: Major deal won to supply £2m of liveried
vehicles to Daniels
Chilled Foods involving 24 vehicles ranging from 3.5-tn vans
through
to tractor units and trailers.

2007: Annual turnover reaches £130m.

2008: June. Three major deals won totalling
around £1.5m.

Brendan Malkin