Struggling ScS bought out by Sun Capital Partners
Friday 04 July 2008
The beleaguered furniture retailer ScS has been sold to a US private equity company after it became the latest retailer to fall into administration.
The deal means that the 96-store retailer's stores will stay open, saving 1,300 jobs, but shareholders are likely to be left with nothing.
Parlour Product Holding, an affiliate of the US-based buyout specialist Sun Capital Partners, bought ScS for an undisclosed fee, following a pre-pack administration.
ScS shares were suspended from trading at 6.5p on 23 June, after the retailer said it was in exclusive talks to sell its sole trading subsidiary. The retailer's share price, which hit a high of £5.70 in April 2006, has fallen by more than 90 per cent in 2008.
Mark Firmin, KPMG's restructuring joint administrator, said: "It is unlikely that there will be sufficient monies to enable any distribution to the shareholders of SCS Upholstery Plc."
ScS chief executive David Knight said: "Certainly it is good news for the staff, suppliers and customers. It is a shame that this is where we have ended up but we are dealing in difficult times and we feel that Sun Capital Partners can help us go forward."
Despite the administration, Mr Knight said that all existing customers' orders would be honoured. ScS only owns the freehold on one of its 96 stores.
ScS has issued a string of profit warnings this year, has been hit by tumbling sales and its suppliers have had credit insurance withdrawn.
Last week, Danish furniture retailer Ilva went into administration, while Land of Leather unveiled a £15m rescue package through a placing and open offer last month.
Mr Knight said he had been given "no indication" that there would be any job losses. He added: "They want the management [team] to stay in place."
"Sun [Capital Partners] says they want to grow and develop the business further. They are talking about expansion," said Mr Knight, although he declined to provide any figures.
ScS chairman Mike Browne said: "Given the difficulties created by the sudden withdrawal of credit insurance cover from suppliers to our retail sector, it became clear that urgent steps needed to be taken to address our increased working capital requirements."
Industry experts believe ScS was a victim of dire trading in the furniture sector, but some cite the fact that it expanded rapidly ahead of the downturn and may have a number of under-performing stores.
In the year to 30 September 2006, ScS opened a record number of 21 new stores. Ten years ago, it had just 14 stores.
ScS will be delisted tomorrow and its shares cancelled.
Founded in 1995, Sun Capital generates sales of €27bn (£21bn) a year and has a retail portfolio of 24 investments.
Sun Capital Partners is an investor in HomeForm, which operates the Moben kitchens, Sharp bedrooms and Dolphin bathroom brands in the UK.
A number of UK retailers have gone into administration this year, including the shoe chain Dolcis and the discount bookseller The Works, as higher mortgage costs, inflation and soaring petrol prices hit consumer spending.
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