C&C Group to repay £30m Conviviality tax bill

C&C Group has agreed a repayment schedule for the £30 million tax bill that contributed to the downfall of former Matthew Clark and Bibendum owner Conviviality.

C&C Group acquired Matthew Clark and Bibendum to create Matthew Clark Bibendum

C&C Group acquired UK drinks distributors Matthew Clark and Bibendum from Conviviality in April, with financial backing from AB Inbev, to create Matthew Clark Bibendum.

In its preliminary full-year 2018 report published this week, the Irish drinks group, which produces Magner’s Cider, said that in total Matthew Clark Bibendum owes around £36m in unpaid excise duty, VAT and other taxes.

A further £102m is owed to three Conviviality banks, which C&C Group said will be paid in instalments over the next 12 months.

The group also said it has resumed “normal credit terms with c. 75% of suppliers” and is in discussions to arrange repayment schedules for the remaining balances.

While outlining its priorities for the coming year for Matthew Clark Bibendum, C&C Group said it has appointed a “new, experienced management team”, including “strong finance directors”.

Stephen Glancey, C&C Group CEO, said: “With net debt/EBITDA of 2.37x at 28 February 2018, leverage at year end remained low. This enabled us to move quickly and opportunistically for Matthew Clark Bibendum, which we acquired post-year end out of the administration of Conviviality Plc.

“Matthew Clark Bibendum is the largest independent distributor to the UK on-trade. With unparalleled on-trade market access, a wide range of supplier relationships and supported by a skilled and loyal employee base, this is a business we know well.

“A strategically important acquisition for C&C, this greatly enhances our route-to-market in the UK on-trade. Significant progress has already been made in stabilising the business. We look forward to working with our new colleagues in restoring the group’s position as one of the leading and most respected drinks suppliers in the UK hospitality sector.”

Conviviality’s troubles came to light in March this year when the UK wholesaler and distributor suspended trading its shares on AIM, a sub-market of the London Stock Exchange. This was due to the discovery of an outstanding £30m tax bill, which led to three profit warnings in the space of a month.

After failing to raise the £125m needed to keep the company afloat, CEO Diana Hunter stepped down with immediate effect.

Soon after the sale of the wholesale division of the company to C&C Group, Conviviality sold the retail arm of its business, which included Bargain Booze, to Bestway Direct Limited for £7.25m.

In the May issue of The Spirits Business, we looked at the events that led to Conviviality’s demise, in which analysts said Conviviality was a “victim of its own success”.