UK: Oddbins seeks deal with creditors - MD
- Retailer seeks CVA with creditors
- MD confident that group has a future
- Legal dispute with Castel ongoing
Oddbins seeks CVA with creditors
Oddbins is seeking a company voluntary arrangement with its creditors in an effort to continue trading, the UK wine retailer's MD has confirmed to just-drinks.
Oddbins' MD Simon Baile said today (11 March) that a company voluntary arrangement (CVA) "is the preferred route" as Oddbins seeks to "cleanse its business". He declined to comment on specific details, but said that the retailer's financial advisers are seeking support from its creditors to install the agreement.
A CVA is a binding agreement with a majority of creditors that allows a company to either reduce or delay payment of money owed in order to continue trading.
The move comes less than a fortnight after just-drinks revealed that Oddbins had appointed Spectrum Corporate Finance to assess its strategic options and that, according to well-placed sources, the retailer owes several drinks suppliers "hundreds of thousands of pounds".
This week, the retailer said it would close 39 of its 128 stores, heightening concerns about its future.
Speaking to just-drinks today, Baile said of the CVA proposal: "We hope that we can get everybody to support it. It allows for Oddbins to trade and progress and serve its customers in a way that it should do."
A lack of cash is understood to have brought Oddbins' troubles to a head. But, poor Christmas trading and a court dispute with the group's previous owner have, for several weeks, threatened to derail Oddbins' revival under Baile, who bought the business from Castel Freres in 2008 and is the son of group founder Nick Baile.
"We've got a cracking business here and we deserve the chance to trade unencumbered," said Baile, who insisted that the group's remaining 89 stores have strong potential. "I can walk into all 89 and they'll trade well and be making money," he said.
Baile said that confidentiality clauses prevent him from going into detail on Oddbins' legal action against Castel, but he spoke of "baggage" from the deal. Castel UK holds a floating charge over Oddbins' stock, according to Oddbins' accounts.
"What we saw in 2008 was a somewhat beaten-up brand that had fantastic presence," said Baile, "but what we didn't want was all the baggage that had accumulated in addition. We tried to park as much of that as possible, but it has not come to pass. That's why we're at court." Castel declined to comment to just-drinks on the case.
Oddbins' situation is another example of tough times for the UK wine trade, which witnessed the collapse of Threshers owner First Quench Retailing at the end of 2009. However, average spend per bottle in Oddbins' stores is GBP8, well above the GBP4.50 national average, and Baile said that he sees more and more wine consumers turning away from the dominance of the big four supermarkets.
"Despite everything, I'm still very confident that there's a place for Oddbins," he said.
Next week should provide greater clarity on the group's future, as more details of Spectrum Corporate Finance's review are set to be released.
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