Editorial: Questions for Comet's owners

 

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Tired shops and uninspiring product ranges notwithstanding, the demise of Comet is still to be lamented. Not only is the electricals chain the 29th retailer to go bust this year, as high debts and low consumer spending take their toll; its collapse will strip the high street of a 90-year-old stalwart and push as many as 6,600 people out of work.

There is a chance that the administrators will find a buyer for the business, but it is a slim one. In the meantime, the 240-odd Comet shops are no longer honouring customer vouchers. So far, so gloomy. And then there is the small matter of Comet's private equity backers to consider.

OpCapita picked up the struggling chain for a mere £2 last year, sweetened with a £50m "dowry" from Kesa, the former owner desperate to sell. In fairness, as Comet is wound down, its suppliers will be paid off first. Next in line are staff wages and other small creditors. Then comes OpCapita. Thanks to a "secured creditor" arrangement, the investors stand not only to recoup the £30m they put in to Comet but to make money from the sale of its other assets as well. And in the future there might also be a return on Comet's profitable warranties business, Triptych, which is held separately.

OpCapita's founder, Henry Jackson, has pulled off a similar move before. In 2006, his investment group bought the troubled furniture retailer, MFI; when it failed, two years later, Mr Jackson's backers boasted that they had made a profit. Full marks for economic efficiency, private equity apologists might say. But between the debt-funded buyouts left high and dry by recession, and the asset-strippers eyeing up the remains, the high street and those that work there are too often the losers.

There is no suggestion that OpCapita has broken any rules. The Comet deal, complete with complicated ring-fencing to protect investors' money, is normal practice. With thousands of people losing their jobs, such activities leave a sour taste nonetheless.

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