Update: Conviviality Plc in administration but hopeful of retail sale
Update 11:30 am UK time: Conviviality Plc has confirmed that it has appointed administrators for the business with immediate effect.
Administrators were named as Matthew Callaghan, Ian Green and David Baxendale of PricewaterhouseCoopers LLP. The crisis-hit drinks supplier said that it was still pursuing a sale of its retail business with interested buyers.
It emphasised that Conviviality Brands Ltd and Conviviality Plc were now in administration but that other companies in the group were not and were continuing to trade.
Read our original story below, published at 8:30 am.
Conviviality Plc now in administration under PwC
Bibendum and Matthew Clark sold to C&C Group – shareholders to receive ‘nominal value’ but trade creditors to be paid in full
Conviviality says still pursuing sale of retail business
Report below by Richard Woodard with extra reporting by Chris Mercer
Beleaguered drinks business Conviviality has said it is still ‘pursuing opportunities’ for its retail operations, including Bargain Booze and Wine Rack stores after agreeing to sell Bibendum and Matthew Clark to Magners owner C&C Group.
The company said all trade creditors of its Conviviality Direct business – comprising mainly drinks suppliers Matthew Clark and Bibendum – would be ‘paid in full’ as a result of the deal with magners cider owner C&C, which emerged yesterday.
It added that the deal ‘assured’ continuity of supply for customers. It added that the deal meant ‘continuity of employment’ for the 1,900 workers in the Conviviality Direct business division. Conviviality has around 2,600 employees across the group.
Conviviality confirmed that it had appointed administrators for subsidiary Conviviality Brands Ltd yesterday (4 April). C&C said that it bought 100% of Matthew Clark and Bibendum shares for a ‘nominal sum’, but it had agreed to pay £102m to Conviviality’s lenders over the next year.
The cider owner said that it had also received financial backing in the deal from AB InBev, which used Conviviality to launch its Bud Light beer brand in the UK last year.
It added: ‘The board consider that the offer from C&C represents the best outcome for creditors, suppliers, customers and employees of the Conviviality Direct business.
‘C&C have undertaken to provide substantial funding to the Conviviality Direct business to ensure creditors are paid and to address the cash flow constraints that have been encountered.’
As well as Bibendum and Matthew Clark, Conviviality also owned the Wine Rack and Bargain Booze retail chains, of which it said: ‘The company continues to pursue opportunities in respect of the Conviviality Retail business, and will provide an update in due course.’
Last night, Conviviality said that ‘no other companies in the group have had administrators appointed, and such other companies continue to trade’.
However, as noted above, Conviviality Plc has subsequently appointed administrators on the morning of 5 April.
The crisis afflicting Conviviality was sparked by profit warnings, plus its admission that it had failed to account for a £30m tax bill, prompting the resignation of CEO Diana Hunter and a subsequent failed attempt to raise £125m from investors.
Matthew Clark, the largest independent supplier to the UK’s bars, pubs and clubs, has a range of more than 4,000 beers, wines, spirits, cider and soft drinks, while Bibendum has a particular wine focus.
Some observers have already voiced concerns that C&C and AB InBev may have little interest in the wine portfolio of its new acquisition.
Wine made up 37% of Matthew Clark and Bibendum combined sales in Conviviality’s 2016-17 financial year, versus 25% for cider and beer, according to Conviviality’s annual report for 2017.
In the last reported financial year, ending in April 2017, Conviviality Direct reported gross revenues of £1.22bn and adjusted earnings (EBITDA) of £51.3m, with gross assets amounting to about £230m, Conviviality said. Net sales were just over £1bn.
Updated at 11:30 am UK time to include the announcement of Conviviality Plc going into administration.
The post Update: Conviviality Plc in administration but hopeful of retail sale appeared first on Decanter.