Written by: Keith Tully
Published: 29th March 2018
The group which owns Bargain Booze is on the brink of entering administration after failing to raise the emergency funds required to resolve a severe cash flow crisis.
Conviviality, which also owns several other alcohol wholesale and retail businesses, has been seeking to raise in the region of £125 million in order to avoid collapse.
However, that funding has not been accessible to the group, which has now officially announced its intention to appoint administrators within 10 business days from March 29th “unless circumstances change”.
Statements given on behalf of the group said: “The Directors intend to allow the business to continue to trade and the Company continues to work alongside advisers in order to preserve as much value as possible for all stakeholders as it explores a number of inbound enquiries regarding a potential sale of all or parts of the business.”
As many as 2,600 jobs are understood to be at risk as the business teeters on the brink of administration.
Conviviality’s shares have been suspended from trading on the Alternative Investment Market since it was revealed earlier this month that it had been in receipt of a £30 million tax bill that it was not in a position to pay.
Although the group’s chief executive has recently stepped down from her role, there were still hopes that enough money could be raised to pay off the unpaid tax bill and meet other outstanding financial demands.
However, those hopes appear to have been dashed, with the group’s tax bill soon to become overdue and emergency funding not forthcoming.
Conviviality was forced to issue a profit warning earlier in March, with financial forecasting errors blamed for the earnings downgrade.
Soon after that profit warning was issued, the group revealed that it had been surprised by its £30 million tax bill that then left it with “a short-term funding requirement”.
There are a total of more than 700 retail outlets owned by Conviviality, with its primary brands being Bargain Booze, Bargain Booze Select Convenience and Wine Rack.
The group also supplies tens of thousands of other outlets around the UK with alcoholic beverages and other products, including hotels, restaurants, pubs and clubs.