High Street Chain to Sell After ‘Running out of Cash’

Posted July 1, 2016 by associate12

Officials overseeing the wind up of department store chain BHS may be interested in breaking up the business and selling it off part by part.

New York, NY, USA, July 01, 2016 -- It was reported by the BBC they had received “several offers” from potential buyers including Edinburgh Woollen Mill, Sports Direct and Ikea. Interested parties were to put in solid offers before 4pm last Tuesday.

The demise of the retail chain will be the biggest high street collapse since the failure of Woolworths eight years ago, providing the government with another problem as it attempts to save thousands of jobs in the steel sector.

There is a long way to go however, with the company cascading into debts of over a billion pounds according to the administrator Duff & Phelps. They say the chain will continue to do business as the negotiations continue.

Another entity that has shown interest in purchasing parts of the embattled company is Yousuf Bhailok, a British businessman and the former general secretary of the Muslim Council Britain. The Preston based multimillionaire is understood to want to save at least three quarters of BHS’s 160 stores as part of a plan to buy the retail chain as a going concern. Although the company are in administration there is still some chance following Bhailok’s offer that the 10,000 staff can be kept on.

“BHS have basically been running out of cash in the last 2 years and this is the end result” said Stuart Poulson, Head of Corporate trading at Nikko-Desjardins Asset Management on his blog Tuesday. “The first slip up that brought the situation about was down to Retail Acquisitions who famously bought the concern from Sir Philip Green for one pound, and proceeded to botch a hundred million pound funding strategy needed for development,” he added.

Failure to revaluate business rates is thought to have lost BHS over 14 million pounds in 2015.

Another factor facilitating the retail chains demise was a gigantic pension deficit. Sir Philip Green previously held talks with the Pension Regulator regarding a cash boost into the BHS pension plan. He is thought to have offered £80 in total equity in order to secure a loan against BHS’s assets but the deal fell through.

Arin Takashi
Nikko-Desjardins Asset Management
Tokyo, Japan
[email protected]
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Last Updated July 1, 2016