Owners agree to provide revolving loan facility if 38 non-profitable stores closed
A court-approved deal has been struck which looks to have saved Clintons from collapse for at least a year, although the restructuring plan means the closure of 38 of the greeting card retailer’s stores.
The Evening Standard reported that the insolvency court accepted the plan on Friday, 25 August, presented by restructuring experts FRP Advisory and law firm Jones Day and the deal means Clintons escapes paying full business rates and rent for the 38 unprofitable sites, the locations of which have yet to be revealed.
Because of this, the affected landlords and local councils will receive only 8.6p for every £1 owed by the greetings specialist, which financial advisors had said was currently insolvent.
Clintons is owned personally by the Weiss family, who also still own 40% of American Greetings, UK Greetings’ parent company.
The Weiss family, descendants of greetings pioneer and AG founder Jacob Sapirstein, are also the company’s main creditor and have agreed to provide a revolving loan facility that should be enough to keep the chain, founded in 1968 by Don Lewin, alive for the next 12 months.
The Standard said the plan showed that the owners, led by brothers Zev and Jeff Weiss, would only continue to fund the retailer, which had been in talks with now-collapsed Paperchase about a merger at the end of last year, if it adopted a new business plan that gave greater hopes of profitability, and they now see that as a possibility with the closure of the 38 loss-making shops and elimination of much of the rent and rates liabilities associated with these.
The ownership group was owed £7.7million, which it has agreed to cut down to £5.3m, the same amount it would receive from administration or liquidation if the business were to collapse, in exchange for more shares.
As they were already the sole shareholders, and as shareholders are of lower priority than creditors when a firm is insolvent, the transfer of debt to equity effectively means that the owners agreed to have £2.4m worth of funds they injected into the firm pushed down the order of repayment priorities.
Hope for Wilko as administrators consider last-minute bids
There is a glimmer of hope for the other beleaguered High Street chain Wilko, which has a large stationery and greetings offer understood to be serviced by IG Design Group, as it was reported over the bank holiday weekend that a second last-minute bid has been received which would keep the business’s entire 400-store estate trading.
With Wilko having fallen into administration earlier this month, private equity firm M2 Capital has confirmed it has made a £90m bid for the business with md Robert Mantse telling the BBC that, if accepted, M2 would “guarantee all employees’ jobs for two years”.
The administrators for Wilko, PricewaterhouseCoopers (PwC), had set a deadline of Friday, 25 August, for bids for the chain, and are understood to have been reviewing offers over the weekend, with HMV owner Doug Putman also having shown interest in salvaging the company, seeking to keep the majority of stores open.
