Stricken Conviviality has confirmed the £7.25m sale of Conviviality Retail to Bestway, including the Bargain Booze, Select Convenience, Wine Rack and Central Convenience chains.
As reported by The Grocer on Friday, the sale secures continued employment for about 2,300 employees of the Conviviality Retail business and provides continuity of trade for suppliers and franchisees.
Matthew Callaghan, Ian Green, and David Baxendale of PricewaterhouseCoopers (PwC) were appointed joint administrators last on Friday of Wine Rack and Conviviality Retail Logistics, and Matthew Callaghan, Ian Green and Peter Dickens, also of (PwC) were appointed administrators of Bargain Booze.
The statement to the Stock Exchange this morning says administrators have effected a sale of the trade and assets of the Conviviality Retail business undertaken by these companies in a deal worth £7.25m.
It added that it was “with regret” that the board noted that the companies were not expected to have sufficient assets to satisfy all their liabilities. The realisations would also be “insufficient to provide any return to shareholders”.
The sale has been agreed further to receipt of many expressions of interest in connection with an accelerated sale process co-ordinated by PwC, the statement said.
Conviviality Retail is the UK’s largest franchised off-licence and convenience chain with over 350 franchisees and more than 800 retail stores trading primarily under the fascias of Bargain Booze, Select Convenience, Wine Rack and Central Convenience, with a distribution from 2 warehouses in Crewe and Newcastle under Lyme.
In the latest audited accounts for the 52 weeks ended 30 April 2017, the Conviviality Retail businesses had gross revenues of £378mn and adjusted EBITDA of £14.3m (pre central costs). Gross assets of the retail business, including the Central Convenience business acquired in December 2017, are about £173m of which about £73m relates to intangibles.
The board considered that the offer from Bestway represented the best outcome for franchisees, suppliers, customers and employees of the Conviviality Retail business, the statement said.
Conviviality’s shares remain suspended “pending further notice”.
All eyes will be on Tesco’s (TSCO) finals on Wednesday with the expectation that chief executive Dave Lewis’s efforts have come to fruition.
The market will want to know how initial attempts to combine with Booker’s operations are faring. Lewis will present the results alongside Booker chief Charles Wilson for the first time.
The £3.7bn deal with Booker completed in March. Credit Suisse said the acquisition could become a “defining moment” for Tesco, albeit “challenging, with different customers, buyers and assets to manage”.
Tesco is tipped to report bumper figures that will buck the gloom on the high street in the wake of the Conviviality collapse and elsewhere in the general retail sector.
Analysts estimate the group will report a pre-tax profit, excluding one-off costs, of about £1.1bn-£1.2bn, a 60pc increase on last year – an uplift likely to be hailed as a success for Lewis. Revenue is tipped to climb from £55.9bn to £57.2bn.
The results are still expected to be significantly lower than Tesco’s 2013-2014 peak, however, when it posted £3bn in underlying pre-tax profits.
On the markets this morning, the FTSE has climbed 0.2% in early trading to 7,199pts.
Early risers include Ocado Group (OCDO) up 1.7% at 527.5p, Greencore (GNC), up 0.8% at 136.2p, Sainsbury’s (SBRY), up 0.6% at 247.5p, Marks & Spencer (MKS) up 9.6% at 270.5p and Tesco (TSCO), up 0.5% at 205.8p.
Fallers so far today include PZ Cussons (PZC), off 0.8% at 225.9p, SSP Group (SSPG), down 0.6% at 602.5p, Coca-Cola HBC (CCH), down 0.5% at 269.4p, Unilever (ULVR), edged down 0.4% at 3999p and British American Tobacco (BATS) slipped 0.3% at 4297p.
This week in the City
A lively week to look forward to beginning with the BRC-KPMG retail sales for March tomorrow, and goods trade balance and manufacturing production figures on Wednesday from the Office for National Statistics.
The main news this week though is Tesco (TSCO) posting its finals on Wednesday, with all eyes on the early progress on its merger with Booker.
Eddie Stobart Logistics (ESL) reports its finals on Tuesday. WH Smith (SMWH) reports its interims on Thursday. Mothercare (MTC), which has been subject to speculation that Sainsbury’s (SBRY) might bid, reports its fourth-quarter figures on Thursday.
Trading statements are scheduled from PZ Cussons (PZC) and Greene King (GNK) on Thursday. AGMs are scheduled on Wednesday for Heavitree Brewery (HVT) and for McColl’s Retail Group (MCLS) the day after.