The Losh Cause
Having been acquired by DM Private Equity in March with promises of a new dawn, the UK drinks retailer Unwins has gone into administration after an eleventh hour bid to find a new buyer or come up with a satisfactory refinancing plan failed. Chris Losh reports.
And so the difficulties of running a high street specialist drinks retailing business in the UK claim yet another victim. After last-ditch attempts to refinance or find a buyer for the ailing off-licence chain, Unwins went into administration last night when KPMG was called in by the retailer's primary creditor, HBOS.
Given the difficulty Unwins had finding a buyer last time - the For Sale boards were up at the Dartford-based company for months without attracting a flood of offers - it was never that likely that a new buyer would come forward, in spite of reports over the weekend of interest from some private equity groups and other retailers.
KPMG said it was too early to say what would happen to the company's 2,500 staff but said it would release more information concerning the immediate future during the course of Tuesday.
The retailer had been working with corporate restructuring specialist Kroll in a bid to find a new buyer. Castel, owners of Oddbins, had been in the running last time, before finding the price too high. But with the freehold on the stores, arguably the most attractive part of the business, now sold it was hard to see them showing as much interest this time.
Unwins, which operates 381 stores as well as a drinks wholesale business, had been a family-owned concern until March when it was acquired by DM Private Equity for £32m.
It's hard not to see the last nine months as anything but an almost unmitigated disaster. DM Private Equity knew when they took over Unwins that the company had not made a profit for at least three years, and that it had debts of GBP21m. What it liked the look of, presumably, was the opportunity to sell off the freeholds on some of the South East's most prime areas of real estate and, I would guess, planned to use this to reinvigorate the business.
Alas, while the sale of the freeholds (for GBP25m) cleared the debt, it didn't do much more than that, leaving DM Equity with an expensively-acquired loss-making business, which was now having to pay for its premises and didn't have much in the way of assets.
DM had brave new plans to cut out under-performing staff and restructure an admittedly lumbering business to make it sleeker and faster on its feet, but financial pressure seems to have rendered this impossible, with the whole house of cards collapsing less than a year after purchase, before most of the changes could be implemented.
It's been reported that the full acquisition price (GBP32m) has not yet been paid by DM Private Equity - and this isn't the only bill to have been spiked. Repeated late-payment of bills to suppliers has led to many companies refusing to sell to the retailer until debts were settled. The result, at the busiest time of year, was shops that looked like something out of Cold War Russia.
The upbeat strategy statements from DM's management, promising 'flexibility and savings' contrasted sharply with the bedraggled shops and bitter letters to trade press from disillusioned store managers, tired of having to explain to customers why they had nothing to sell but half a dozen bottles of Hock.
DM Private Equity, with its 'sale and leaseback' strategy, was a surprise white knight when it rode to Unwins' rescue in the spring. Now, it turns out the group had no more than a paper sword and brave words with which to do battle.
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