Business Irish

Wednesday 1 October 2014

Job loss fears as Homebase Ireland enters examinership

Tim Healy

Published 16/07/2013 | 12:16

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AN interim examiner has been appointed by the High Court to the company operating 15 Homebase home and gardening stores here employing 558 people, of whom 444 are part-time.

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AN interim examiner has been appointed by the High Court to the company operating 15 Homebase home and gardening stores here employing 558 people, of whom 444 are part-time. 

It is anticipated three of the stores - in Carlow, Castlebar and Fonthill Road, Clondalkin, Dublin - may close under restructuring proposals with the loss of 96 jobs, including 17 full-time positions.

Mr Justice Brian McGovern today appointed Kieran Wallace of accountancy firm KPMG as interim examiner to Homebase House & Garden Centre Ltd, the Irish arm of the UK Homebase retail group incorporating the Homebase and Argos brands. He returned the petition for confirmation of Mr Wallace as examiner to July 26th.

Moving the petition on behalf of the Irish company, Rossa Fanning said it employed 558 people - of whom just 114 are full-time - and had been loss-making for a number of years due to factors including falling demand and onerous leases.

Turnover for the year to end March 2006 was some €67.6m but that fell to some €46.3m for the year to end March 2013.

The company had no bank debt but had continued to trade with the assistance of inter-company loans, he outlined. It now owed more than €30m to two companies in the wider group. Annual rental costs were some €10.3m and all the stores were held on foot of long-term leases involving five yearly upwards-only rent reviews. 

Last Friday, the UK group parent had stated it was withdrawing its support without which the company was insolvent but the company's petition and an independent accountant's report identified debt restructuring and other measures necessary if it were to have a reasonable prospect of survival as a going concern.

An independent accountant believed the company had a reasonable prospect of survival if certain conditions were met, including renegotiation or repudiation of leases and acceptance of a scheme of arrangement by the High Court. Even if rent issues were addressed for the three stores at Carlow, Castlebar and Fonthill Road, they may have to close given the extent of their losses, counsel indicated.

Further store closures may be necessary if rents are not repudiated or renegotiated, he added. 

Mr Fanning also indicated the company sources most of its product from an inter-group supplier with the effect  its list of creditors is small. Preferential creditors include a number of local authorities in relation to rates while no historic debt is owed to the Revenue Commissioners.

The judge also heard the parent group is prepared to allocate €2.14m to meet trading costs during the examinership period.

 

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