Alexon, the embattled fashion retailer, has just three weeks to raise fresh funds to help to safeguard its future, as it and other troubled retailers get ready to face a hefty quarterly rental payment this week.
Ahead of the fourth quarter rent day on Thursday, Alexon is in talks with one party to acquire the company, while others are interested in snapping up some of its six brands, including Eastex, Kaliko, Dash and Ann Harvey.
New Takeover Panel rules forced Alexon to update the market last week on its talks with suitors, when the group admitted it was struggling to meet its payments due over the coming weeks.
These primarily relate to its rental dues and payments for the Christmas stock, although the group has said its bank, Barclays, remains supportive of plans to address its capital structure.
But Alexon – which has 78 stores and 1,071 concessions – is far from alone in battling financial constraints. Following a dreadful summer, a number of retailers are facing difficulties ahead of rent day on 29 September.
Under the new Panel rules, the firm seeking to acquire Alexon must make a fully financed bid within 28 days of the commencement of the offer period on 19 September or walk away. One unnamed party has submitted a proposal to acquire Alexon but the group said last week that this was "at a significant discount to the share price".
Those that have held talks with Alexon recently include Hilco, the retail restructuring firm, and Rutland Partners, the private equity turnaround specialist. Endless, the Leeds-based private equity firm, had also been in early-stage discussions but is now thought to have ended its interest.
Jacques Vert, which also caters to older women, is understood to be monitoring the situation, as are department stores that house Alexon concessions.
On 19 September, Alexon – which declined to comment yesterday ahead of its half-year results on Friday – laid bare its cash flow concerns and said its net debt has increased to £12.9m. The group said it is "currently operating with limited headroom against its existing [banking] facilities and accordingly there is a clear requirement for additional funding in the short term as it enters the seasonal peak in working capital requirements".
In light of this, Alexon added, it has also "invited and received indicative proposals to acquire one or more of the group's brands or provide alternative debt financing from a number of trade or financial parties".
This month, Alexon appointed a restructuring team from KPMG to help it consider its options. Barclays has hired a team from Grant Thornton to conduct an independent business review of Alexon. This is a standard procedure for a bank exposed to a financially challenged company, which decides to explore its options.Reuse content