Xtra-vision says 1,300 jobs still safe as examiner steps in at firm
THE owners of Xtra-vision sought to assure 1,300 workers last night after an interim examiner was appointed.
Birchall Investments, the parent company of the movie and electronics retail chain, confirmed yesterday that David Hughes of accountancy firm Ernst & Young has been appointed interim examiner of the Xtra-vision business. A petition will be made to the High Court on May 12 to formalise the appointment.
In court yesterday, barrister for Xtra-vision, Rossa Fanning, said that the move to appoint an examiner was prompted to a significant degree by an inability of the company to reduce its rent bill, despite having cut many other costs.
Xtra-vision has 181 outlets in Ireland, about 45 of them in Northern Ireland, and generates 70pc of its revenue from the sale of electronic goods and video games, with the remainder from rentals.
Birchall Investments has confirmed that, subject to the "eventual approval" by the High Court of an appropriate scheme of arrangement, backers have pledged an additional €6m investment in the chain. Revenue at the business is understood to have fallen to just over €100m from nearly €160m a number of years back.
It is believed that the company is paying rent on as many as a dozen properties it has already vacated because it can't get out of the lease agreements.
It's thought that a small additional number of loss-making stores could face the axe as a result of the examinership process, although that remains uncertain. The vast majority of its outlets are profitable.
A spokesman for retail union Mandate, which represents workers at Xtra-vision, was uncontactable for comment last night.
In a brief statement, Birchall Investments said that Xtra-vision was continuing to trade as normal during the "temporary period of examinership".
The court was also told yesterday that Xtra-vision has sufficient funds to enable it to continue trading during examinership. "While it has secured significant reductions in costs in some areas, the company has failed to secure commensurate reductions in property rents, despite strenuous efforts to do so," added the company.
On entering examinership, Xtra-vision will apply to the High Court to repudiate some of its existing lease agreements, enabling the business to renegotiate better terms with landlords. The formal examinership process lasts up to 70 days and can be extended by 30 days on approval from the High Court.
The company's overall yearly bill on its property leases North and South of the island is about €10m.