Conviviality warns of going bust as it seeks to secure £125m
The giant’s financial woes, which came to light earlier this month, have left some pubco customers in a panic.
The Morning Advertiser understands one national pub chain is tentatively looking at its options in the event of the wine business crumbling.
In a progress update last night (21 March), Conviviality said it had held “constructive discussions with HM Revenues and customers” regarding the £30m tax payment due at the end of March.
“The board of the company today announces that through its broker – Investec bank – meetings with institutional investors have been arranged for the coming days starting today to effect an equity placing to raise gross proceeds of £125m,” the statement read.
Profits down £10m
Conviviality predicted on Wednesday profits for the 12 months to 29 April would be down by around £10m but, if it secured financial support from investors, annual underlying profits would be up to £46m.
As well as a significant tax bill, the wine business, which owns several brands vital to the pub trade, will need to pay a £30m debt to creditors.
Conviviality’s brands:
- Matthew Clark
- Bibendum
- Walker & Wodehouse
- Catalyst plb
- Peppermint
- Elastic
- Bargain Booze
- Wine Rack
The giant’s chief executive Diana Hunter stepped down from the helm this week after the company issued two profit warnings.
Hunter relinquished her role with immediate effect but agreed to stay on for a time to support the transition of Conviviality.
Non-executive chairman and former retailing finance director David Adams has become interim chairman.
Adams issued a statement on his appointment, claiming the company would have relationships with customers “for years to come”.
He said: “We’re a profitable business with the very best route to market in the UK – and our suppliers, franchisees, producers and customers know this."
‘Short-term challenge’
He continued: “We’re very grateful to have so many people across the industry stand by our side and rally around us as we overcome this short-term challenge.”
Business at Conviviality would continue as normal while the company sought to solve its financial troubles.
JD Wetherspoon (JDW) is one of the company’s biggest customers, however, a spokesman from the pubco said JDW was not commenting on the situation.
A Conviviality spokesperson said: “Our fundamentals haven’t changed. Conviviality is a profitable business, with the very best route to market in the UK.
“We continue to work with and be supported by our customers, suppliers and banks as we resolve this short-term challenge. PricewaterhouseCoopers are working with us to review and agree our financial position.”
