Threshers' owner issues 'going concern' warning

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The Independent Online

The group behind the off-licence chain Threshers has issued a "going concern" warning, citing a "material uncertainty" that casts significant doubt on its ability to continue trading.

The private equity-backed First Quench Group, which operates 1,400 Threshers, The Local and Wine Rack fascias, has been hit by tough trading and the withdrawal of cover for some of its suppliers by credit insurers, which has put pressure on its working capital. Vision Capital acquired Thresher Wines Holdings in July 2007 for £95m, but many of its stores have suffered at the hands of the big supermarkets and the costs of operating on the high street.

For the period from 16 May 2007 to 28 June 2008, First Quench posted a pre-tax loss of £30m, according to accounts filed at Companies House. First Quench, which has no third-party bank debts, said it has detailed plans and forecasts to 26 June 2010 and has concluded the group can "remain within the level of finance available".

However, the group highlighted risks, including hitting sales forecasts and exiting loss-making stores. In an emphasis of matter warning, First Quench said: "The combination of these circumstances represent a material uncertainty that casts significant doubt upon the group's ability to continue as a going concern."

A First Quench spokeswoman said: "Cashflow reductions and credit lines have been withdrawn in our sector because of the economic downturn." Its owners have injected £35m of funding into the business to strengthen its balance sheet and working capital facility over the past 10 months. It has exited 162 loss-making stores and is understood to want to ditch up to 400. The group axed 48 head office employees in March, but deployed half the affected store staff in other shops.