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30 Sep 2011
MORE THAN 2,700 JOBS should be saved after KPMG administrators sold womenswear clothing retailer Alexon in a pre-pack.
The Luton-based retailer, which began trading in 1929 and operates through 990 outlets, was facing cashflow problems through its next quarterly rent bill and Christmas stock. It was also in debt to its lender Barclays.
Further reading
Unable to sell the business on while trading as a going concern, it entered into administration and was immediately sold to Sun European Partners.
The deal drew a "line in the sand" for Alexon, said Will Wright, joint administrator of Alexon and restructuring director at KPMG.
"We received a great deal of interest from buyers keen to turn the business' fortunes around. We are pleased that the level of buyer interest was enough to avoid a full operational administration via a ‘pre-pack', securing around 2,700 jobs and protecting precious value," said Wright.
Jane McNally, chief executive officer of Alexon, said: "The capital investment the Sun European Partners affiliate will be making in Alexon as part of this transaction will enable us to invest further in our turnaround strategy which is focused on restructuring our store portfolio, the roll out of new retail environments and further acceleration of our e-commerce business."
"The turnaround programme pursued by the business to date has improved performance and returned the business to profitability," said Paul Daccus, principal of Sun European Partners.
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Press Release Contradiction MOST URGENT
An article in the Daily Telegraph on-line is stating that the suppliers will be protected in the Sun / Alexon Pre-Pack deal, whereas other papers are stating that suppliers and HMRC will lose all or most of the amounts owing to them.
I reproduce the Telegraph article by Helai Ebrahimi (see below). You state that this was not a full operational administration via a ‘pre-pack'. Does this mean that the conventional prepack scenario of unsecured creditors being 'hung out to dry' causing a cascade effect of many small design and manufacturing fashion businesses.
being forced to the wall, does not apply in this case?
I look forward to your reply.
Text reproduced from Telegraph article
By Helai Ebrahimi
7:00PM BST 29 Sep 2011
Comments2 Comments
The deal allows , the buyer, to shunt Alexon's £12.9m of debts while still protecting 2,700 staff jobs.
The deal saves Alexon, which specialises in older women and plus-sizes, from becoming the first victim of this month's "quarter day", when many retailers have to pay their landlords. Quarter day fell on Thursday.
"Pre-packs" are controversial because suppliers and debt holders often at the mercy of cynical owners who rid themselves of liabilities while at the same time buying back the company.
In the Alexon deal, the suppliers and staff should be fully protected, the debt-holders are expected to see some of their money back, but the shareholders are not expected to see a penny.
Over the past year, shares in Alexon, which owns fashion brands Kaliko and Eastex as well as Ann Harvey, have plummeted 85pc. This left the company with a market value of just £4m – less than a third of its net debts.
Posted by: Henry Leapman FCA, 01 Oct 2011 | 12:17