Alexon rescued in pre-pack deal that secures almost 3,000 jobs

Nearly 3,000 jobs are expected to be saved at the troubled fashion group Alexon after it was acquired out of administration by Sun European Partners, the private equity firm.

Alexon, which owns seven brands including Ann Harvey, Kaliko and Eastex, yesterday appointed KPMG as administrator after it became the latest retailer to collapse under the weight of its debts, amid dire trading.

But Sun European quickly snapped up Alexon in a pre-packaged administration deal, a controversial insolvency procedure that allows a company to fold and then be bought quickly by new owners after debts are ditched.

After issuing three profit warnings inside 12 months, Alexon said last week it was considering a proposal to acquire the company at a "significant discount to the share price". The group was also mulling over selling certain brands to address its cash crisis, as it faced a burdensome fourth-quarter rental payment due yesterday and huge bills for Christmas stock ordered.

But Alexon, which had debts of £12.9m with Barclays, said: "Unfortunately these options have failed to reach a satisfactory conclusion in the time available, and following discussions with the group's lenders, it became clear that the group was unable to continue trading as a going concern."

The last rent quarter-day in June pushed retailers such as Jane Norman, Habitat UK, HomeForm and TJ Hughes into administration. Shares in Alexon were suspended before trading began yesterday at 2.82p, far from their record high of 322.4p in October 2003.

Jane McNally, the chief executive of Alexon, whom Sun European intends to retain, said: "We are extremely pleased to have a new owner which gives our business the more appropriate capital structure that we have been seeking."

While Sun European said the deal is "expected to preserve over 2,700 jobs", pre-pack deals typically result in some job losses and store closures.

Indeed, Ms McNally said part of its turnaround strategy was focused on "restructuring our store portfolio". Founded in 1929, Luton-based Alexon – which has 78 shops and 1,071 concessions – caters for older women.

Paul Daccus, the principal of Sun European, which owns the ScS sofa chain and Scotch & Soda clothing brand, said: "Alexon has strong brands which operate in a growing segment of the retail sector and this is an exciting acquisition." Sun European has experience of running concessions, as it also owns V&D, the department store in the Netherlands, into which it is expected to put some Alexon concessions.

The private equity firm is likely soon to begin talks with Alexon's concession partners, including Debenhams and House of Fraser, which can end these agreements under change-of-ownership clauses.