Conviviality Plc, the owner of the UK’s biggest on-trade wholesaler Matthew Clark, 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 of £125m ‘failed to materialise’.
Conviviality said this morning (March 29) that it intended to appoint administrators for the business, which is one of the UK’s biggest wine suppliers, encompassing wholesaler Bibendum as well as Matthew Clark, and which also includes the Bargain Booze and Wine Rack retail chains. PwC is likely to be appointed administrator.
Efforts to raise the emergency funding to keep the business going had failed, Conviviality said in a trading update last night (March 28).
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 employs around 2,600 people, according to its 2017 annual report. Conviviality shares have suspended on the London Stock Exchange since it discovered a £30 million unplanned tax bill (due today) last month.
It has lowered its full-year profits guidance twice in the last three weeks and chief executive, Diana Hunter, resigned earlier this month.
Conviviality said that it was possible the company could now be broken up – Matthew Clark (or parts thereof) could be a tempting target for a large wholesaler looking to dominate the on-trade and build a bulwark against the dominance of the newly-merged Booker/Tesco..
The company 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.
“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.”