Rents burden Ryman

Buy-back bid for stationer stalled by high costs of prime shop sites

JENNIFER D'ABO, who built Ryman the office stationer into a high street chain in the 1980s, has warned that any investor would find it tricky to keep the business afloat, unless it renegotiates its shop leases. Ryman, part of the financially crippled Pentos group, is being sold by administrative receivers at KPMG.

Mrs d'Abo says she wanted to buy back into Ryman, for the receiver's prospectus shows a still healthy business. But, deterred by high rents being paid by the company's high street premises, she has withdrawn.

"It is a sound company, with nothing wrong at the operating level at all. But I turned my head in horror and ran when I saw the size of the rent roll," she said. Mrs d'Abo did not disclose the level of rents Ryman was paying - many for expensive locations in London and the South-east.

Firm bids have also been received from at least one, and possibly two, teams of Ryman franchisees, backed by 3i venture capital. But it is understood these bids have run into difficulties from 3i's lawyers, who are insisting on stringent guarantees before new money is committed.

Philip Wallace, joint administrative receiver at KPMG, says there is no rigid timetable for the sale. A key date, however, will be the 25 March rent quarter day when Ryman faces its next funding squeeze, although the receiver says a strategy is in place to cope if a sale has not been concluded by then.

But talk of Ryman fetching more than £7m seems unrealistic. One bidder has already submitted a cash bid of £1m. That was rejected by the receivers, and they still seem to be hoping for upwards of £3.5m. KPMG says it had six firm offers lined up by the end of last week, with a further three likely to materialise.

As well as the high rents, there are other obstacles in the way of a quick sale. Ryman has guaranteed to honour a contract by Athena Manufacturing to print half a million greetings cards for the Athena chain, after the latter collapsed last Christmas. That could cost a buyer of Ryman up to £200,000.

Any cut in the final price KPMG obtains will only confirm the plight of former Pentos shareholders and unsecured creditors. Shareholders will lose every penny. Unsecured creditors will lose most, if not all, of their money.

KPMG has raised £36m from the sale of the Dillons book chain to Thorn EMI, and a further £9.25m from the sale of Pentos Office Furniture to Bullough.

That means that £72m of bank debt and secured borrowings will not be repaid in full, stinging bank lenders as well.