JD makes £4m bid to rescue Faith chain and save 1,700 jobs
Thursday 29 April 2010
The sportswear specialist JD Sports Fashion yesterday made a bid to buy the footwear chain Faith for £4m, which could save the 78-store chain and around 1,700 jobs.
Faith, which also has 120 concessions, mainly in Debenhams, appointed the accountancy firm Mazars last week as administrator after buckling under the weight of its £13m debt. The accountancy firm said it wanted to find a buyer as a going concern for the women’s shoe retailer.
Yesterday, Heath Sinclair, the joint administrator, told The Independent that the deadline for offers to be made is 7 May and that Mazars had sent out 38 non-disclosure agreements, which has resulted in 12 information packs being issued. He declined to comment further.
A board member at JD Sports Fashion, which operates the JD chain, made the £4m bid by telephone on Wednesday to buy Faith out of administration, although a formal offer has not yet been submitted. Sources said that Mazars had not yet responded to JD’s offer.
JD is keen to rescue and build up the Faith chain, as well as safeguard the jobs of staff at the retailer, which was founded in 1964.
A potential rejection of a formal bid from any party to save the Faith chain would cause substantial anger in the footwear sector, which has suffered a series of administrations in recent years.
Before Mazars was appointed last week, JD was one of the last remaining bidders in the frame to buy Faith, which was put up for sale in March.
The restructuring specialist Hilco bought at a discount the debt of £13m that lenders and investors had in Faith and its parent company, FEC Holdings, before Mazars was hired. It is understood that Hilco paid £3.8m to buy out the £13m debt from the bank Barclays, the investment fund Agilo and John Kinnaird, the chief executive of Faith.
Mr Kinnaird is believed to have had £1.5m invested in the business, with Barclay’s £7m and Agilo’s £4.5m making up the remainder.
Sources said that Debenhams, the department store chain which houses 110 Faith concessions, is considering acquiring the Faith brand and stock from the administrator Mazars. If a purchase was forthcoming, this would be similar to the deal Debenhams did to acquire the brand and stock of Principles, the fashion chain that collapsed in 2009.
The administrator has already started closing down some Faith shops, with associated job losses. This week, Mazars has closed 11 Faith stores and 2 Chilli Pepper units, the fashion brand that was also under the FEC Holdings umbrella. Sources said up to 50 of Faith’s head office staff have been made redundant.
Before it collapsed, Faith Shoes Group employed 362 full-time staff and 1,382 part-time employees.
Sources said that shoe suppliers were being offered prices at a huge discount in the pound for their stock in Faith. The quandary for those suppliers who have retention of title rights for the stock is that they typically don’t have the resources to collect the stock from all of Faith’s stores and face the prospect of not having a retail outlet to sell their products.
Faith, Mr Kinnaird, JD, Hilco, Debenhams, Barclays and Agilo declined to comment.
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