Philip Day, owner of the Edinburgh Woollen Mill Group, has put a deadline on his his offer to buy Bonmarché over concerns about its ability to operate as a going concern.
Under the rules of the Takeover Code, Day has to keep his offer open for 14 days until July 12. After that time, the offer will close. Day had previously issued an open-ended offer to Bonmarché shareholders, which the retailer initially urged its shareholders to ignore.
However, Bonmarché yesterday made a U-turn, telling its shareholders that they should accept Day’s £5.7m offer due to worsening trading.
The embattled retailer put its poor first-quarter trading down to “the continued weakness in the underlying clothing market” and a “lack of seasonal weather to counteract it”. It said there was a “significant degree of uncertainty” over whether it would achieve its profit target this financial year.
PwC, the retailer’s financial adviser, questioned whether the business would be able to continue as a going concern without an improvement in trading for the rest of the financial year.
The retailer’s share price crashed more than 25% to 11.4p following the dramatic change in position.
Day’s holding company Spectre said: “In light of the Bonmarché board’s latest trading update, Spectre now believes that the passage of time, and a further decline in the performance of Bonmarché, has eroded Spectre’s ability to provide the advice, guidance and support needed to secure the long-term future of the Bonmarché business, its stores and employees.”
Spectre said it was ”especially concerned by the suggestion that PwC, Bonmarché’s auditor, may shortly express uncertainty about the company’s ability to continue as a going concern in its FY19 accounts.
”Spectre also notes Bonmarché’s comments that the company has adequate liquidity only insofar as its bank continues to support it with a £5 million overdraft and other facilities. Against a background of negative trading updates and declining financial performance, Spectre is concerned Bonmarché may soon no longer have facilities available to it.
”In light of this information, Spectre believes it is now forced to close the offer.”
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