Hunter faces write-off on HBOS deal to rescue Wyevale
Wednesday 17 December 2008
The Scottish entrepreneur Sir Tom Hunter could face his second write-off of a major investment in recent months, as he gears up to complete a debt-for-equity swap deal with HBOS to safeguard the future of the struggling Wyevale Garden Centre.
Sir Tom, who owns 40 per cent of Wyevale through his West Coast Capital investment vehicle, is understood to be confident about tying up the deal with the high street bank before Christmas.
The deal is likely to result in a substantial dilution in the Scottish billionaire and philanthropist's shareholding in Wyevale, which has £360m of debt, and follows West Coast Capital's decision to write off its hefty investment in the housebuilder Crest Nicholson.
Castle Bidco, the consortium of Bank of Scotland and West Coast Capital, acquired Crest Nicholson for £715m in March 2007, but the investment is widely recognised as one of Sir Tom's worst as it came a few months before the peak of the housing market. It is understood that while West Coast Capital still owns its shareholding in the housebuiler, its investment of about £35m of equity was written off the investment vehicle's books a few months ago.
The major dilution in Sir Tom's investment in Wyevale has raised further questions about the dire performance of some of his investment portfolio amid the credit crunch. A West Coast Capital spokesman said: "We will still have a very large chunk of that business [Wyevale] after the negotiations are concluded and we are comfortable with those negotiations."
Last year, Sir Tom vowed to give back £1bn over his lifetime to charitable causes and while he is understood to remain committed to the pledge, the credit crunch means he will have to run faster to meet it.
Among his other investments, McCarthy & Stone, the British retirement home builder in which Sir Tom has an 8 per cent stake, is also struggling. It is understood that negotiations with McCarthy and Stone's banks are ongoing. USC, the designer clothes chain backed by Sir Tom, is also thought to be suffering challenging trading. However, West Coast Capital also is an investor in the shoe chain Office, which is understood to be bucking the retail gloom. West Coast Capital through a joint venture with Prestbury Investments Holdings owns the freehold, which is leased back, on 135 hotels of Travelodge, the budget operator which is riding high.
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