Conviviality sells part of business but future looking grim for Bargain Booze

Bargain Booze faces bleak future

 

The company behind the Magners and Bulmers cider labels has confirmed a deal to buy a part of the troubled Conviviality business.

Irish based C&C has bought Matthew Clark and Bibendum – the wholesale side of the Cheshire based business.

The sale is likely to signal the end for Bargain Booze and Wine Rack, the retail division of the business, and the loss of hundreds of jobs.

Earlier in the day C&C confirmed that it was holding talks with Conviviality over a potential deal.

Conviviality supplies around 23,000 pubs and restaurants across the UK including the  JD Wetherspoon chain.

The firm announced last week it was planning to go into administration after failing to raise the capital needed to keep it afloat.

The deal, which has received the financial support of drinks firm AB InBev, C&C will acquire Conviviality’s wholesale business for a ‘nominal sum’.

Conviviality bought drinks wholesaler Matthew Clark in October 2015 for £200m and wine specialist Bibendum for £60m in May 2016.

A statement from Conviviality said: “The Board consider that the offer from C&C represents the best outcome for creditors, suppliers, customers and employees of the Conviviality Direct business.

“C&C have undertaken to provide substantial funding to the Conviviality Direct business to ensure creditors are paid and to address the cash flow constraints that have been encountered. C&C have paid a nominal sum for the shares acquired and have agreed to pay, in aggregate, £102 million to Conviviality’s secured lenders over the next 12 months to repay the debt of the Conviviality Direct business to such banks.

“The Company continues to pursue opportunities in respect of the Conviviality Retail business and will provide an update in due course.”

Stephen Glancey, C&C chief executive, said: “We know the Matthew Clark and Bibendum businesses very well.

“They are great businesses with unparalleled on-trade market access, a wide range of supplier relationships and supported by a knowledgeable and loyal employee base.

“The last few weeks have been challenging for employees, customers and suppliers alike. We hope today’s announcement can put an end to this period of disruption and uncertainty.”

Conviviality, which employs 2,600 staff, said last Thursday it intended to place itself in administration within 10 working days after failing to raise the £125m needed to keep the company afloat.

The move came after a string of profit warnings and the revelation that the company owed HMRC £30m.

In an earlier statement C&C said: “Consideration for the shares will be a nominal sum, and C&C will provide sufficient funds to support the on-going working capital and other cash requirements of the business.

“In addition, AB InBev will provide additional financial support to the transaction. At completion, Matthew Clark Bibendum will have £102 million of working capital facilities provided by its current lender group, repayable in instalments over the 12 months following completion.”

The news comes just weeks after the collapse of Toys R Us and Maplin.

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