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Blacks prepares to file for administration

by Laura Board in London | Published January 6, 2012 at 10:01 AM

Outdoor clothing and equipment retailer Blacks Leisure Group plc confirmed Friday, Jan. 6, that it expects to sell its assets through a prepack administration after it conducted an auction that yielded no offers for its equity.

Blacks, of Northampton, England, said it will appoint KPMG LLP partners Brian Green, Richard Fleming and David Costley-Wood when it files for administration. It will do so immediately before a sale and in the meantime is continuing discussions with bidders.

Blacks shares Friday were suspended, while its near-300 Blacks and Millets stores remain open.

"The company expects to be in a position to announce a sale of substantially all of the trade, assets and brands of the group within the next few days," Blacks said.

Black's advisers at KPMG, led by David McCorquodale, received four bids by Thursday's second-round deadline, including from 22% shareholder Sports Direct International plc, JD Sports Fashions plc and entrepreneur Peter Jones, best-known for his role in TV series Dragons' Den. The identity of the fourth bidder is unknown.

All of the bidders expect to retain most of Blacks' 300 stores, and a majority of its 3,500 employees, according to a person familiar with the situation.

Leading sporting goods retailers Sports Direct and JD Sports expect to shed Blacks' distribution infrastructure and head office, the Financial Times reported Friday.

Blacks put itself up for sale on Dec. 7 after falling short of cash to execute its turnaround plan. The company has about £36 million ($56.1 million) of net debt and its main lender is Lloyds Banking Group plc's Bank of Scotland.

Blacks' same-store sales fell 7.2% to £81.1 million in the six months to Aug. 27, and its pretax loss widened to £16 million from £7.2 million.

Blacks in December 2009 shed 88 stores through a solvent restructuring known as a company voluntary arrangement. Its administration will fuel criticism that CVAs, regularly criticized by landlords, often fail to address businesses' fundamental problems. However, the extent of the U.K. economic downturn in recent months took many observers by surprise and has contributed to the demise of several other well-known retailers in recent weeks, including shoe retailer Barratts Priceless Group.

Prior to the current auction, Blacks had had at least two rounds of bid interest since the CVA with parties reportedly including Lion Capital LLP and Lloyds Development Capital, and before that from Sports Direct.

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Tags: Blacks Leisure Group plc | KPMG LLP | M&A | restructuring

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Blacks prepares to file for administration

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