BHS facing oblivion
High street giant could collapse today over its £1.3billion debt
British home stores was on the brink of collapse last night.
Administrators could be called in as early as today, according to sources, with 11,000 jobs at risk.
the chain has been a fixture on the high street since 1928 but now risks joining Woolworths and other historic retail names on the scrap heap. it has failed to embrace the online shopping revolution and has faced increasing competition from cut-price rivals such as TK Maxx.
Bhs has been struggling under £1.3billion of debt, a slump in sales and years of losses, but there were hopes it might pull through with an injection of cash.
On Friday a spokesman denied rumours the 164-store chain was about to go into administration, insisting it was ‘business as usual’. But the press office was not answering calls last night.
Unions called on management to come clean. ‘We are seeking urgent clarification from the company and urging them to change their attitude to trade unions and begin a dialogue with us at this difficult and worrying time for staff,’ said David Gill of Usdaw.
Last week Bhs failed to announce the agreement of a hoped-for £60million loan.
its owners have also been trying to raise £100million from property sales, after selling their lease in Oxford street for £30million.
sports Direct, which is owned by Newcastle United boss Mike Ash2014. ley, is understood to be in talks about buying some stores.
But any new owner risks being on the hook for a £571million pensions black hole.
sir Philip Green bought Bhs in 2000 for £200million and was able to take around £400million out of the company in dividends between then and 2004.
But from 2010 Bhs spent five years haemorrhaging profits and shoppers, with visitor numbers dropping by 800,000. it made a loss of £69million in the year to August
‘Twice declared bankrupt’
sir Philip sold the chain for just £1 in March last year to a consortium of City investors under the name retail Acquisitions.
the consortium was controlled by Dominic Chappell, a former racing driver with no retail background and who had twice been declared bankrupt.
there were rumours at the time that other wealthy individuals were involved but no names have been made public. Keith smith, chairman of retail Acquisitions, called the sale ‘a fantastic opportunity’.
it has since emerged the new owners took out an £8.4million loan as they made their acquisition, with £3million split between Mr Chappell and fellow directors Eddie Parladorio, Mark tasker and stephen Bourne.
it was also revealed that the firm is held to a 100-year lease for its Clydebank branch, which lasts until 2103. this is almost unheard of in a sector where typical leases are five or ten years. it is estimated that the lease is also paying about 65 per cent above the market rate.
the struggling chain was forced to beg creditors for their support last month as it battled to survive.
At a meeting in a west London hotel, 95 per cent of creditors agreed to accept a cut in rent at half the chain’s stores.
sir Philip is in negotiations with regulators about how much he should pay to help plug Bhs’s pension hole. he is understood to have offered £40million but the official watchdog, the Pensions regulator, wants more.