Blacks Leisure, the struggling outdoor retailing group, has been forced to put itself up for sale after shareholders refused to inject more cash into the business.
The company announced yesterday that it wished to "invite offers to support further investment in the group, which is most likely to involve a sale of the company or sale of one or more of the group's brands". This came after talks with shareholders about raising investment foundered.
The shares plummeted more than 50 per cent to 1.85p as the companyrevealed that with debt at £36m "there can be no assurance that any sale would attribute value to the ordinary shares of the group".
The decision to move to what company insiders called "plan B" of a sale, is likely to pave the way for a pre-pack administration. The controversial insolvency procedure allows acompany to collapse and then be bought quickly by new owners after its debts have been wiped out.
Accountancy group KPMG, which was involved when the company underwent an insolvency procedure that saved Blacks two years ago, has been called in to run the sale.
The company, which also owns the Millets chain, has been desperately tapping up shareholders to raise additional cash. Analysts put the figure at around £20m, although Blacks have declined to name its exact target. The group said last month it was experiencing the worst retail environment it had ever seen. As well as the need to raise cash, Blacks has been in talks with Lloyds Banking Group to renegotiate more than £40m of debts due at the end of February.
Yet the discussions have proved fruitless. One insider said: "There was good response from the shareholders, but there wasn't the support for the capital raising. The appetite wasn't there."