1,000 Gateway jobs at risk

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The Independent Online
UP TO 1,000 jobs could be axed in the Gateway supermarkets chain under an efficiency plan being being prepared for its struggling parent, Isosceles, by Coopers & Lybrand, the consultants.

It also emerged yesterday that Coopers is forecasting that Isosceles will plunge to a pre-tax loss of pounds 335m in the year to April 1993. Last year it made a pounds 4m profit.

The massive deficit includes a pounds 153m provision for rolled-up interest payments. Isosceles, which owes about pounds 1.5bn, has frozen all interest and debt repayment while it negotiates a third restructuring with its bankers.

The cost of restructuring, including redundancy payments, is forecast at pounds 118m, which wipes out a predicted operating profit of pounds 103m. There is also thought to be a pounds 50m write-down on property and heavy advisory fees.

As well as advising on the business plan, which was recently presented to the banks, Coopers is also examining ways of increasing efficiency. It is thought that up to 1,000 jobs could go among the group's 41,000 full and part-time employees. The final report is due in 10 weeks.

Isosceles denied a report that the study envisaged a 9 per cent cut in Gateway staff, which would have meant the elimination of almost 4,000 jobs.

David Simons, the chief executive installed in January, has already started cutting jobs at the top of the organisation. Most recently, the heads of the Western and South-east divisions, respectively Alistair Forbes and Paul Fox, have gone.

Banks to Isosceles are considering ring-fencing Gateway, the operating business that includes Somerfield and Food Giant, and allotting perhaps pounds 500m of debt to it. This is probably the most it could comfortably service, given its operating profits and the need for capital investment.

The near- pounds 1bn remainder of senior and mezzanine debt, which has little prospect of any short- term pay-back, would be shouldered by an arms-length Isosceles.

Under the standstill arrangement, interest is rolled up until 28 May. However, suppliers to Gateway, which enjoys credit of about pounds 300m at any one time, are likely to become anxious soon if no deal is in sight.

The retailing sector has suffered a rash of job losses recently. Last week BhS announced 3,100 full and part-time job losses, but created 2,000 new part-time posts. Burton Group, Littlewoods and Allied Maples are also shedding staff.

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