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Fears mount for Bonmarché

Concerns for the future of Bonmarché are growing, after its CEO and CFO sold their entire stakes in the retailer to Edinburgh Woollen Mill owner Philip Day.

Bonmarché’s chief executive Helen Connolly and chief financial officer Stephen Alldridge sold their shares to Day’s company Spectre Holdings on 1 July, days after Day announced he was closing his offer to buy the remaining shares in Bonmarché for the price he paid, 11.45p, following poor trading at the retailer. On 28 June, Bonmarché’s third-largest shareholder, Cavendish Asset Management, also sold its 10.8% stake to Spectre.

A source close to the situation said fears are mounting that the business may be teetering on the brink of administration: “The signs aren’t good at all. It’s very worrying that the management are selling, especially at a level they said was low ball only seven weeks ago. The worry is that it might be on the brink of administration with no facilities to keep it running.

“Why are the management selling now rather than [closer to when the offer closes]? If they’re this keen to get out, could it collapse this week?”

Spectre must give 14 calendar days’ notice of closure. As a result, the offer period will end at 5pm on 12 July.

Another source said: “It doesn’t reflect well on the board members of Bonmarché. They said, ‘Stick with us, everything is hunky dory.’ But since its auditors PwC expressed concern, they’ve decided that the game is up, and said ‘We need to get out of this.’

“There’s now a threat of a genuine administration because PwC says the business looks like it’s running out of money. The end of Bonmarché as we know it is now imminent.”

In April, Day’s Spectre Holdings purchased 52.4% of Bonmarché’s ordinary shares, triggering a mandatory takeover bid.

At the time, Bonmarché’s directors unanimously recommended shareholders reject the offer, which they said “materially undervalued” the company. However, following a difficult first quarter, the board said last week they should accept the offer, as the terms are “fair and reasonable”, adding that they would sell their own shares.

In a statement, Bonmarché said: “The increase in uncertainty that has developed reflecting the trading and financial position of the business during the first quarter of the financial year makes the certainty represented by the offer potentially more attractive in the short term.”

Bonmarché said it had “adequate liquidity” from its bank by way of its £5m overdraft and other facilities.

Despite this, Spectre said it was closing its offer because the future of the business looks uncertain: “The latest trading update has eroded Spectre’s ability to provide the advice, guidance and support needed to secure the long-term future of the business, its stores and employees.

“Spectre is especially concerned by the suggestion that PwC, Bonmarché’s auditor, may shortly express uncertainty about the company’s ability to continue as a going concern in its 2018/19 accounts.”

Day currently has a 67% stake in the retailer, and needs 75% to de-list from the London Stock Exchange. 

CEO of Retail Economics Richard Lim said once Day takes the firm private he can begin a restructuring process: “As soon as Philip Day has an adequate proportion of shares, he will de-list the business, which will give him more flexibility for the future. Inevitably, it will result in him looking to streamline the business that is likely to result in fewer stores, staff and jobs.

“The business is suffering on a number of fronts – it’s a really tough environment; it has issued a profit warning; it needs to get the products right; and it is facing competition from discount retailers. Realistically its going to be a question of disposing of stores and slimming down the workforce.”


Readers' comments (2)

  • Paul Mumford , of Cavendish asset management describes management in one word "incompetent" pretty well sums it up.

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  • Feels like watching ‘call my bluff’. Besides, if senior management want to stay on board, holding up the process isn’t going to achieve that aim.

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