UPDATE: Conviviality heads for administration

Conviviality has confirmed its intention to appoint administrators after the company failed to raise the £125 million (US$176.8m) investment it needed to stay afloat.

Bargain Booze owner Conviviality is heading to administration following numerous profit warnings

A statement, released by the company this morning (29 March), reads: “Following discussions with its lending banks, the board has resolved to file notice of intention to appoint administrators to the company.

“Unless circumstances change, and in accordance with statutory requirements, the board intend to appoint administrators within 10 business days. The secured creditors can, however, appoint administrators without the requirement for notice.

“The directors intend to allow the business to continue to trade and the company continues to work alongside advisers in order to preserve as much value as possible for all stakeholders as it explores a number of inbound enquiries regarding a potential sale of all or parts of the business.”

The UK-based alcohol distributor and wholesaler was aiming to raise the £125m through an equity placing to recapitalise its business. Conviviality said it faced bankruptcy if it failed to raise the money.

The move followed numerous profit warnings and the discovery of a £30m tax bill, all within the space of one month.

In a company update, released yesterday (28 March), the Bargain Booze owner said there was “ultimately insufficient demand” to raise the £125m, despite a “significant” number of meetings with investors and discussions with suppliers and customers.

“The board wish to thank its customers, suppliers and employees for their continued support during this difficult period for the company,” the firm said in the statement.

“The company is in discussions with its lending banks and advisors regarding other possible options and is in receipt of a number of inbound enquiries regarding a potential sale of all or parts the business.

“The board believe that shareholders in the company will receive little-to-nil value.”

Conviviality suspended trading its shares on AIM – a sub-market of the London Stock Exchange – after identifying a £30m (US$42m) tax bill due on 29 March 2018.

CEO Diana Hunter resigned from the board with immediate effect and non-executive chairman David Adams stepped into the leadership role of executive chairman.

Commenting on the announcement, Miles Beale, chief executive of the Wine and Spirit Trade Association, said: “It is sad news for all concerned and for the wine and spirit industry as a whole that Conviviality have announced plans to file for administration.

“We are sending our support and best wishes to Conviviality’s employees who are facing uncertain times.

“The WSTA look to support the great British wine and spirit industry – including its jobs, businesses and employees facing uncertain times.”

Conviviality is the leading UK alcohol wholesaler and distributor. It owns the Matthew Clark, Bibendum, and Bargain Booze subsidiaries, among others. The company serves 10,000 customers and more than 23,000 outlets, with more than 2,500 people on its staff.

A further update is expected in due course.