the mountain Who is likely to want Alldays this time around?John Wood reports Alldays' management terminated exploratory talks with interested buyers early in 2001 because, it said, none of the offers were acceptable. This week it revealed talks were on again. So what has changed to encourage a potential buyer back to the table? The main stumbling block to any deal was the mountain of debt. Whether the share price is 20p, valuing the company at #10m, as it was two years ago, or 5p, valuing the company at #2.5m, as it is now, is almost irrelevant when compared with the debt of #190m Alldays owes to its banks. Potential purchasers trying to make the deal work last time found the figures just didn't stack up, but now it looks as if the banks have had enough. When the talks were terminated in February last year, Alldays' management said it would trade its way out of the crisis. But even if it does manage to move into profit interest charges have pushed recent results into the red it would take decades to get the debt down to manageable levels. On Monday Alldays made a Stock Exchange announcement saying it was in talks with a third party which could lead to a debt restructuring and shareholders receiving 5p per share. In other words, the banks, not known for their long-term outlook, are now looking to refinance the debt, probably writing off some of it, to get their hands on at least part of what they are owed. Another deterrent This reduces the cost, making Alldays a more attractive proposition. But there is another factor that deterred potential purchasers last time round. When Alldays was going all out for growth in the late 1990s, it simply paid too much for some sites. Competitors say it has some very good stores, and they would be keen to cherry-pick the Alldays estate. But there are other stores which will never be viable because of their high rents. Any deal would also have to take this into account. Despite these drawbacks, several groups are attracted by Alldays' network of 600 c-stores offering coverage of most of the UK. Most prominent is the Co-operative Group, which has pursued an aggressive expansion plan for its Welcome c-store chain. The society could also defray some of the cost if other societies were willing to buy stores in their territories. This week the Co-operative Group was not commenting on rumours suggesting it was the "third party", and other societies said there had been no contact about them taking on stores. But a deal would be a real coup for newly installed chief executive Martin Beaumont. Another group which would be able to spread the cost around several principals is Spar. Its md Jerry Marwood has made growth a prime objective, and the company's wholesalers have proved they can do joint deals for national companies, carving up estates across their territories. Insiders suggested it would be interested. Alldays would also fit neatly into c-store specialist T&S Stores, and it would take the company into Scotland for the first time. T&S has a track record of taking over other large c-store chains such as M&W, One Stop Convenience Stores and Day & Nite and integrating them very successfully, but these deals have left it with fairly high borrowings and the cost of the Alldays deal might be considered too high. Least daunted by the cost would be Sainsbury and Tesco, and each is looking to grow its c-store format, with Tesco chief executive Terry Leahy setting a target of 1,000 Express stores in five years. But few of the Alldays stores would be large enough to accommodate the major multiples' c-store concept, leaving them with the headache of disposing of the rest. With competition expected to intensify even further in the multiples' traditional marketplace it seems unlikely either would want such a huge distraction. One thing seems sure, though. The situation at Alldays must change. Despite the massive constraints of the debt mountain, Alldays chief executive Stuart Lawson has recently been able to boost margins and even trial some new stores, but announcing its interim results in June he said: "There is no disguising the need for a financial reconstruction and we continue to pursue various options." If the banks dictate it, the only option left would appear to be a takeover. {{NEWS }}