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Thousands of jobs at risk as BHS faces collapse

BHS is understood to have lined up administrators and will make an official announcement on its future later this morning.


It comes after owner Retail Acquisitions’ last-minute attempts to secure emergency funding to prop up the business, which operates 164 stores and employs around 8,500 staff, failed.

Retail Acquisitions had originally planned to raise £170m and use £70m to pay back debt owed to London-based investment group Grovepoint Capital.

Of that, £10m was to come from removing the use of letters of credit, £60m from a loan from Gordon Brothers, £70m from the sale of the Oxford Street flagship and £30m from a deal with Sports Direct for a package of eight stores.

However, the Oxford Street store only sold for £50m and the Sports Direct deal collapsed at the eleventh hour. In the end, Sports Direct only took one store in Sunderland for £2m.

In addition, the asset-based lending of £60m from Gordon Brothers turned out to be a deal “not fit for purpose”, a source told Drapers. It required a £2m payment upfront and interest of £100,000 per week. It also included various clauses that would trigger the ability of Gordon Bros to claw back assets.

A source close to the situation said: “Retail Acquisitions has left BHS high and dry.”

Sports Direct was reportedly interested in acquiring BHS, but the deal fell through because of the chain’s pension obligations. Its pension deficit amounts to £571m.

The two pension schemes, which have 20,000 members, are undergoing assessment to enter the Pension Protection Fund.

Insolvency firm Duff & Phelps will be tasked with handling the administration, according to The Sunday Times.

The collapse will come just over a year after Arcadia boss Sir Philip Green sold the 88-year-old chain to Retail Acquisitions for £1.

BHS received a stay of execution last month when its creditors backed a company voluntary arrangement (CVA), allowing it to slash rents at a number of loss-making stores.

Phil Dorrell, partner at consultancy firm Retail Remedy, said: “We might love the BHS brand but when was the last time you shopped in a store? Lose sight of your customer and you lose sight of your business.

“The attention has all been on the debts of the business but the ongoing strategy of BHS has been neglected. There isn’t a reason to shop there. The supermarket offers tick all the boxes that BHS once owned and without a radical change in proposition there just isn’t a space for BHS to occupy.

“When the administrators are called in, there won’t be a retailer to buy BHS wholesale. Expect a piecemeal sale of specific sites in strategic locations to John Lewis possibly or Sports Direct or Next.

“Sadly this is probably the beginning of the end for BHS on our high streets. It would take a brave and innovative business to buy the brand and turn it into an ongoing concern.”

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