Ailing Wickes secures pounds 18m from banks
Thursday 04 July 1996
Chairman Michael von Brentano said: "Our objective and that of our funding banks has been to ensure stability for the business. We have made it plain that the accounting issues which have been uncovered should not detract from the fact that our operating businesses are sound."
A Wickes spokesman said a working facility of pounds 18m had been made available to the company. This replaces the pounds 30m Wickes borrowed from a banking syndicate led by Barclays in February 1995, but had never fully drawn down.
The news followed lengthy recent meetings with the bankers to assess the problems. They were concerned about Wickes' future following last week's revelations of an accounting scam going back several years.
Wickes, the UK's third largest DIY retailer, has reiterated in the last week that the accounting problems have not resulted in a cash flow problem.
But the irregularities, described by the company as "deliberately misleading", have resulted in an overstating of profits over several years. Latest internal estimates indicate that 1995 profits were overstated by pounds 20m to pounds 25m.
Wickes is currently in the throes of an internal investigation to discover the scale of the problem and its perpetrators. The thrust of the investigation, being carried out by accountants Price Waterhouse and law firm Linklaters & Paines, is believed to centre on the relationship between Wickes and its suppliers. Initial reports are expected next week.
Meanwhile the company's shares remain suspended at 69p, having almost halved when news of the irregularities broke.
Henry Sweetbaum resigned the next day as the pounds 1m-a-year chairman and chief executive. Two senior managers have also been suspended pending the outcome of the inquiry which will interview Wickes' employees, including Mr Sweetbaum.
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