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Lloyds adds to pressure on All Saints to find new investor

James Thompson
Saturday 02 April 2011 00:00 BST
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Lloyds Banking Group has hired an accountancy firm to offer advice on its option should All Saints fails to find an investor in the next week to inject fresh funds into the fashion chain.

The decision by the retailer's main lender to draw up contingency plans by appointing KPMG follows the collapse of talks on Wednesday between All Saints' stakeholders and a consortium, including the Beirut-based conglomerate M1, which had been poised to take control of the chain.

The current difficult situation at All Saints was triggered by the collapsed Icelandic banks Kaupthing and Glitnir deciding to sell their shareholdings in the retailer.

The accountancy firm Ernst & Young (E&Y) was hired in February to find buyers for stakes in All Saints. A price tag of up to £140m was placed on the retailer, but concern has grown that All Saints may need to raise funds more quickly than a typical bidding process would allow.

The collapse of talks with M1, a group co-founded by the next likely Lebanese Prime Minister, Najib Mikati, has raised questions over the future of All Saints, which has 63 stores and 47 concessions in the UK, Europe and in the US.

However, Goode Partners, a US private equity firm, which was involved in the initial bidding process, has now rekindled its interest in All Saints and made a new offer, according to a person familiar with the situation. This is now likely to be considered over the weekend.

Another US investment firm, MSD Capital, has also been linked to a deal with All Saints. But if a buyer cannot be found in the next week then Lloyds may consider placing All Saints into administration, although less grisly measures could also be implemented to safeguard its immediate future.

One option, for example, would be for Kaupthing to delay selling the bank's stake until All Saints is on a firmer financial footing.

A spokesman for Lloyds said yesterday: "We are fully supportive of All Saints and we are continuing to work with the company towards a sale."

However, he declined to comment on any detail of the sale process or the possible administration of All Saints. People familiar with the situation stressed that KPMG had been hired as an adviser and not as a potential administrator.

Over the 12 months to 31 January 2010, the last period for which figures are available, All Saints more than doubled its pre-tax profits to £10.7m, on sales up by 46 per cent to £132.9m. However, its current trading is unclear in Europe, where a consumer slowdown is buffeting many retailers, and the United States, where an expansion saw All Saints open 10 stores, including outlets in New York, Los Angeles, San Francisco and Las Vegas.

Established in 1994, All Saints is best-known for its distinctive stores, which are fitted out with 10,000 vintage Singer sewing machines. All Saints and MSD Capital did not return calls yesterday, while Goode Partners, E&Y and KPMG all declined to comment.

Less than two weeks ago, Stephen Craig, the chief executive of All Saints, said: "We are confident that the chain's best days are ahead of it."

A week is a long time in Retail..

Alworths, the "son of Woolworths", has become the third retailer to collapse into administration this week.

The chain, which was set up by a former director of Woolworths, appointed Leonard Curtis as administrator yesterday, although its 17 stores will continue to trade while the insolvency firm seeks to find a buyer. Andy Latham set up Alworths around the time the 99-year old high street stalwart closed its 800 stores in January 2009.

The menswear retailer Officers Club and the furniture chain Easy Living fell into administration earlier this week. Oddbins, the high street wine retailer, is expected to file for administration on Monday.

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