Jan 6, 2012
Blacks Leisure sale to follow administration
Jan 6, 2012
LONDON - British outdoor goods retailer Blacks Leisure is to go into administration and then be sold within days to one of four bidders including entrepreneur and Dragons' Den TV star Peter Jones, JD Sports Fashion and Sports Direct.
Loss-making Blacks, saddled with 36 million pounds ($56 million) debt, said on Friday its shares had been suspended and the process to appoint administrators would begin shortly, with KPMG lined up for the role.
Its 306 Blacks Outdoor and Millets stores -- which sell products such as walking boots, camping equipment and ski jackets, employing about 3,500 staff -- will continue to trade.
The company said it had received several final offers from suitors it did not name. None of the offers attribute any value to the firm's equity, which was in line with a Dec. 23 update.
A source familiar with the situation told Reuters most of the trade, assets and brands of the group would be sold to either Jones, Sports Direct, which is Blacks Leisure's largest shareholder with a 22.5 percent stake, JD Sports or another trade buyer.
Sports Direct, Britain's largest sportswear retailer and controlled by Newcastle United soccer club owner Mike Ashley, ruled out a bid for the equity last month.
A deal would likely safeguard the majority of store jobs at Blacks, although unprofitable outlets could be jettisoned and jobs at the company's distribution warehouse and Northampton headquarters, about 10 percent of the 3,500 total, would be under threat.
Jones's spokesman was not available to comment, while JD Sports and Sports Direct declined to comment.
"The board has now determined that any sale of the trade, assets and brands will be effected through an administration process," Blacks Leisure said, adding the formal appointment of administrators would take effect just before the completion of a sale, a so-called pre-pack administration.
This process sees a company declared insolvent before immediately re-emerging under different ownership in a pre-arranged deal.
WINTER OF DISCOUNT TENTS
With shoppers' disposable incomes squeezed by rising prices, muted wages growth and government austerity measures, store chains had a tough Christmas, using early sales to attract customers. They do not expect 2012 to be much better.
Hedge funds hunting profits from falling share prices are circling many of Britain's biggest store groups, and fears are growing of a wave of retail failures equivalent to that which saw Woolworths go under in 2008-09.
A handful of small privately owned retail players went into administration over the Christmas holiday, including toy store Hawkins Bazaar and fashion chain D2 Jeans, after quarterly rent fell due on Dec. 25.
By James Davey and Sudip Kar-Gupta
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