Nearly all of Unwins' 1,400 staff were made redundant yesterday by administrators called in to the failed off-licence chain.
Administrators at KPMG closed down the company, retaining just 20 people, mainly IT staff and property directors, who will help with the winding down. Yesterday's redundancies follow the laying off of 400 staff last week and the closure of all but 95 of its 350 stores.
In a nation of boozers, the demise of Unwins, the biggest off-licence chain in the South-east of England, might strike some as counter-intuitive.
The retailer, owned by DM Private Equity, was forced into administration on Monday night when the group's bankers, HBOS, called in KPMG to assess the state of the retailer's finances. By yesterday afternoon KPMG was advising Unwins' remaining London staff to head for the job centre, not even able to promise written confirmation of their plight because of the vagaries of Christmas post.
DM's Australian chairman Phillip Cook, who chaired Unwins, and his fellow director Natalie Kennedy are believed to be planning to go to Dubai on holiday this weekend. "Some people feel like bashing their office door down," one employee said.
Myles Halley, the joint administrator at KPMG, said: "Unwins has suffered, like other off-licence chains, from increased competition from supermarkets and tight margins. The directors have tried unsuccessfully to restructure or sell the business and it is evident this company is making excessive losses and has no stock to continue to trade."
Unwins owes about £35m, mainly to suppliers, including Diageo. The borrowings include £5m of secured loans owed to HBOS.
The administrators are seeking buyers for Unwins' 350 mainly leasehold stores, many in prime locations, and its freehold head office in Dartford, Kent. They said they were in early talks with interested parties. An insider said: "There are some serious offers on the table for the properties, but it's going to take time to sort it out." KPMG took over from the restructuring specialists Kroll, who had advised Unwins on a sale of the business. Bid interest has come from other off-licences which can easily graft Unwins shops on to their chains, and private-equity houses. Unwins has received 25 expressions of interest, whittled down to a handful of indicative offers, but they came too late to prevent the shutdown.
Unwins' directors filed an application at the High Court in London at the start of last week to place the business in administration, giving it five working days to find a buyer or refinancing package. The application was a short-term protection against creditors.
The winding down will not be a straightforward affair. DM said yesterday it would begin legal action to seek full restitution and damages from the former Unwins directors, the former auditors Moore Stephens and all 84 Unwins shareholders, alleging it had been misled as to the value of the business when it acquired it in March.
It is an ignominious end for a company founded in 1843 which grew into one of the biggest off-licence chains in Britain. It was taken over by the Wetz family in 1921, who merged it with the wine and spirit importer Phillips Newmans. In March the family sold the business to DM for £32m, including debts of about £26m.
Unwins staff also fear for their pensions. Some have claimed even though pension contributions have been deducted from wages, they have not gone into the pension fund. Friends Provident is investigating the claims. A spokesman said yesterday defined pension schemes are safe even when a company becomes insolvent, and unpaid contributions relating to the past 12 months can be recovered.
The retailer's collapse will come as no surprise to anyone who has visited an Unwins store recently. Many shops have been running down stocks for months, leaving shelves largely empty, and some were forced to close after staff walked out, fed up with customer complaints. Suppliers have complained about unpaid bills and the company sold off 40 stores to raise money.
Observers have long questioned DM's strategy. The relatively unknown private-equity firm was set up in 2003.
Insiders say Unwins was in a bad state when DM acquired it, but the private-equity firm hoped it could turn it around. Since September, Mr Cook has undertaken a major restructuring, including a rationalisation of the supplier base. The group cut the number of products it stocks from "several thousands" to "several hundreds" which led to strained relations with suppliers.
The company's ambition was to float the business next year. Throughout Unwins' struggles in the past 10 months, Mr Cook has maintained the business "continues to trade according to its business plan".
But insiders say it has always suffered supply problems. "Unwins had a somewhat patchy record in terms of paying suppliers on time. It took longer and longer to pay, didn't get the stock needed and so didn't generate enough cash. It becomes a downward spiral," one source said. "It has been unable to sustain its head office costs. They were out of line with other retailers."
Despite its size and turnover of about £160m, Unwins has struggled. The Wetz family brought in professional managers two years ago to revive it, but decided to sell. The high street shops attracted interest and the Alternative Investment Market-listed property investment firm Halladale was tipped to snap up the chain. It was thought to have had the backing of Unwins' board, but investors preferred DM.
DM's approach was led by David Massey, a former journalist who quit Unwins about three months ago. In the past, he has headed Brain Games Network, a failed AIM venture, which owned the rights to the World Chess Championship but collapsed in 2003.
DM's takeover of Unwins involved a sale and leaseback of its 96 freehold shops to the property group Helical Bar for about £25m to reduce the company's crippling debts. The retailer's bankers, HBOS, insisted DM put up about £3m of equity in the acquisition vehicle before they accepted the deal.
DM found an ingenious solution: realising that one of Unwins' major problems related to stock supplies, DM issued preference shares in Unwins to Palandri, an Australian wine producer listed on AIM. Philip Wetz, a former joint managing director of Unwins, sits on Palandri's board as a non-executive director.
Palandri agreed to supply £3m of Australian wine to Unwins. That amounted to about 120,000 cases, which were supposed to fill Unwins shelves for 12 months.
From family business to failure
1843 - Unwins is founded.
1921 - Unwins is taken over by the Wetz family, who merge it with the wines and spirits importer Phillips Newman.
March 2005 - The Wetz family agree to sell Unwins to DM Private Equity for £32m including debt.
September 2005 - DM undertakes a major restructuring of the business, including job cuts and a rationalisation of the chain's supplier base.
December 2005 - Unwins secures emergency cash injection from DM.
12 December - The directors of Unwins Wine Group and Unwins Limited file an application to the High Court in London to place the companies into administration. They gain five working days' breathing space and are being advised on a possible sale by the restructuring specialists Kroll and the lawyers DLA Piper. Unwins receives a number of indicative offers from other wine retailers and private-equity houses for all or parts of the business.
19 December - Unwins' bankers, HBOS, call in KPMG as administrators.
20 December - KPMG closes down the company and makes all 1,400 staff redundant. Continues talks to sell shops to interested parties.Reuse content