Conviviality launches last ditch survival bid
Bargain Booze owner Conviviality has announced it will be “unable to trade as a going concern” unless it can raise £125 million to shore up its finances.
The group, which also owns Wine Rack, Matthew Clark and Bibendum, has scheduled make or break meetings with potential investors in the coming days.
It needs the money to settle a £30 million HMRC bill it overlooked, repay a revolving credit facility, resolve overdue payments with its creditors and return to normalised trading terms.
It needs a further cash injection to provide working capital headroom and fund costs associated with the work undertaken to recapitalise the business.
It believes £125 million will be enough to give it some much-needed breathing week after an extremely tumultuous week.
Shares in the group were suspended at 101p last week – down from a high of 426p in November 2017 – after two profit warnings within the space of a few days.
The first was blamed on an “arithmetic error” made by a member of its finance team and softening margins, and it later admitted it had not budgeted for the £30 million tax bill due at the end of this month.
It has now issued a third profit warning, saying that if the new share placing is successful it expects annual underlying profits to be between £45.5 million to £46 million.
That would be a considerable drop on the £55.3 million to £56.4 million it announced last week, and a lot less than the £70 million the City was initially expecting.
Conviviality added that it would make an open share offer to all shareholders worth £4.4 million if the share placing goes through.
The plans still need to be rubberstamped by shareholders at a general meeting. Shares in the company remain suspended until further notice.