Administrator buys DIY chain in £1 deal

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The Independent Online

The high street do-it-yourself retailer Fads, which was declared insolvent 18 months ago, found itself with an unusual owner yesterday after it was acquired by its administrator for just £1.

David Mond, of business recovery specialists Hodgsons, is heading a group of investors, including the hi-fi entrepreneur Julian Richer, to buy Fads' 53 stores. The move came after several attempts to find another buyer failed.

Mr Mond is planning to seek an AIM-listing for Fads, which has debts of £4.5m, later this month. The home furnishings group will be the main interest of a cash shell, Strategic Retail, which was formed as a vehicle to buy up distressed retail companies.

While Mr Mond admitted that the deal presented a potential conflict of interests, given that an administrator's job is to secure the best price for an insolvent company, he said Fads' trade creditors had approved the move. "Out of 93 creditors, not one demurred," he said. They will receive 25p for every £1 owed, instead of the more usual 6p in the pound in similar instances, he said, giving the deal a total valuation of around £1.5m.

Mr Mond, who will be the non-executive chairman of Strategic Retail but will not draw a salary, is investing £50,000 in the new company and will have a shareholding of around 12 per cent. Roy Gabbie, who used to own Stationery Box, will be the chief executive, while Ian Currie, who has worked for the brokers Altium Capital and Peel Hunt, will be executive chairman.