Deadline set for Austin Reed to find a buyer
The owner of cash-strapped retailer Austin Reed is in a race against time to find a new owner after it filed a notice to appoint administrators last Friday.
The filing of the notice gives the retailer 10 days of breathing space by placing a moratorium on claims by creditors. During this time it is understood that an accelerated sales process will be explored. Further time could be granted by a judge if the court rules that deal is imminent.
The owners took the decision having reviewed the books of the beleaguered Yorkshire-based company in more detail, in order to head-off any precipitative action from other creditors.
Meanwhile, Alteri Investors, which purchased equity in the ailing company just two weeks ago, recently appointed turnaround specialists Alix Partners to run a sales process.
In February 2015, 99 per cent of creditors rubber-stamped a creditors voluntary agreement (CVA). But the concern for the owners could be that in the face of further challenging trading and a potential cash hole, creditors may not be willing to agree to another CVA so shortly after the first.
Just four months after the CVA was agreed last year management secured additional funding from Alteri. The exact sum remains unknown. The CVA saw the company close 31 stores and pay down some of its lending, but having been unable to arrest the poor performance. Alteri took the decision to purchase the equity in the company in order to “protect our position as secondary lenders”.
The company’s senior lending is provided by Wells Fargo, which had an £18m revolving credit facility in place at the filing of the last accounts in October 2015. It is understood that Wells Fargo are firmly supportive of Alteri’s current strategy and the ongoing sales process.
Sales in the latest accounts for the year to January 2015 were £44m, a far cry from the £62m achieved in 2007. It has been widely reported that sales figures have fallen further over the last 15 months.
Austin Reed was not available for comment.