Tuesday 21 January 2020

Chinese private equity firm emerges as front runner in Conviviality bid

It is currently seen as the strongest contender among a raft of interested parties.

Bargain Booze owner Conviviality is looking for a buyer (PA)
Bargain Booze owner Conviviality is looking for a buyer (PA)

By Kalyeena Makortoff, Press Association City Correspondent

A Chinese private equity firm has emerged as a front runner in the bid for Conviviality after pairing up with a team of the Bargain Booze owner’s management.

The Press Association understands that company leadership including Conviviality’s group corporate finance director Bruce Casely have banded together with ZQ Capital in hopes of snapping up the ailing business.

It is currently seen as the strongest contender among a raft of interested parties that is believed to include Magner’s owner C&C Group, Molson Coors and AB Inbev.

Talks with potential bidders took place over the weekend and are understood to still be taking place as its options are considered.

PwC, which is believed to be advising on the sale, declined to comment.

A sale within the next week could save Conviviality – which supplies 23,000 retailers, hotels, restaurants, pubs, clubs and bars – from collapse.

The company announced last Thursday that it could file for administration within 10 business days unless circumstances changed, putting thousands of jobs at risk.

Conviviality employs over 2,639 people and has more than 700 retail stores trading primarily as Bargain Booze, Select Convenience and Wine Rack.

Conviviality said last week that it would continue trading in order to preserve as much value as possible for stakeholders and was exploring “a number of inbound inquiries regarding a potential sale of all or parts of the business”.

It follows a torrid month for the firm, which saw its chief executive Dianna Hunter step down after issuing a string of profit warnings and revealing a £30 million tax bill.

Shares have been suspended since Conviviality disclosed the tax bill, which created what it called a “short-term funding requirement”.

Conviviality was forced to go cap-in-hand to investors to raise £125 million as a result, but has been unable to convince them of its long-term future.

Ms Hunter, a former Waitrose director who had been chief executive since 2013, led the group through its stock market flotation in the same year, and oversaw a number of acquisitions, including Wine Rack, Matthew Clark and Bibendum.

Non-executive chairman David Adams has taken her place until further notice.

The company’s collapse would cap a nightmare quarter for the retail sector.

Since January, Toys R Us and Maplin have filed for administration, while fashion retailers such as New Look and Select have embarked on radical store closure programmes.

Piling on the misery has been the under-pressure casual dining sector, with Prezzo, Byron and Jamie’s Italian all shutting restaurants and culling hundreds of jobs.

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