20th Jan 12
Peacocks collapses after failed last minute rescue bid
by Harry Oldfield
Shutting up shop: Peacocks set to be the biggest administration since Woolworths
Shutting up shop: Peacocks set to be the biggest administration since Woolworths
High street retailer Peacocks fell into administration amid bitter recriminations after a rescue bid in excess of £50m was rejected by lenders.
Peacocks will become the country’s biggest administration since Woolworths, with 9,600 jobs being lost – after a depressing number of company failures during recent weeks. Talks over a last-minute rescue deal, fronted by the incumbent chief executive Richard Kirk and supported by an unnamed financier, collapsed on Wednesday morning, leading to KPMG being appointed as administrators the same day.
The team which made the rescue bid is believed to have originally put forward an offer of £65m for the 611 shops and 49 concessions. This put a value of 28p per pound on Peacocks’ £240m net debt. However, sources revealed that amid a disagreement about the sale of Bonmarché, Peacocks’ subsidiary, the price was dropped and the deal broke down. Debt buyer Sun European is now in discussions to purchase Bonmarché, which has not entered administration.
Executives dealing with the rescue bid said that the failure of KPMG to give detailed answers to a number of questions, such as verifying the cash total on the retailer’s balance sheet, also held the deal back. The accountant was further embarrassed when some of the administration paperwork was unable to be filed on Wednesday, meaning the formal application was delayed until Thursday. In addition, there was an issue over the £3m which the credit card provider withheld in the short term, due to any possible shortfall in charges, gift cards and refunds.
The rescue bid team were also concerned that sales from last weekend had yet to be banked by store managers, leaving the takings completely unclear. A source said that the deal was ready, subject to resolving these three issues but, ultimately, they were not sorted.
Sources close to the bid also claim that at the last minute they were asked to underwrite the deal by Sun European to buy Bonmarché. Lenders have revealed that they wanted £12m for the subsidiary if the deal was successful but the buyer was only willing to offer £7m.
A second lender said that the unnamed bidder did not have a proven track record. It explained that due to the anti-fraud regulation situation and the know-your-customer criteria at present, this increasingly became a tough deal to complete.
Joint administrator and KPMG’s head of restructuring in the UK, Richard Fleming, said that he was actively seeking an interested party to buy the stores and concessions and urged those considering it to get in touch. An RBS spokesman said that they will continue to work alongside each side in order to help the retailer find a viable way to continue trading.
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