Conviviality Plc has said that it intends to place itself into administration and has added that it faces the possibility of being broken up via a sale of different business arms, after emergency funding failed to materialise.
Conviviality said this morning (29 March) that it intended to appoint administrators for the business, which is one of the UK’s biggest wine suppliers, encompassing Bibendum and Matthew Clark, and which also includes the Bargain Booze and Wine Rack retailers.
Efforts to raise £125 million of emergency funding to keep the business going have failed, Conviviality said in a trading update last night (28 March).
It said today that it would appoint administrators within 10 working days ‘unless circumstances change’, but added that secured creditors could bring this action forward it they chose to.
It said that it remained in discussion with lenders and has received ‘a number of inbound enquiries regarding a potential sale of all or parts the business’.
The group directly employs around 2,600 people, according to its 2017 annual report.
Some in the trade had come to fear the worst following a difficult few weeks for the company, which has seen its shares suspended on the London Stock Exchange since it discovered a £30 million unplanned tax bill due on 29 March.
It has lowered its full-year profits guidance twice in the last three weeks and has also seen the departure of its chief executive, Diana Hunter, in that time.
Management has consistently thanked trade customers and creditors for their patience and support and pointed to positive initial discussions with lenders and HM Revenue & Customs.
But, last week the group said that it needed to raise £125 million in order to re-capitalise the business.
That funding has not materialised and Conviviality said that it was possible the company could now be broken up.
It said today, ‘The directors intend to allow the business to continue to trade and the company continues to work alongside advisers in order to preserve as much value as possible for all stakeholders as it explores a number of inbound enquiries regarding a potential sale of all or parts of the business.’
It said last night, ‘Despite a significant number of meetings with potential investors resulting in good levels of demand, and constructive discussions with a number of key customers and suppliers regarding the provision of support, there was ultimately insufficient demand to raise the full £125.0 million.
‘The board wish to thank its customers, suppliers and employees for their continued support during this difficult period for the company.’