Frasers Group buys online retailer out of administration in £27m deal

Mike Ashley’s Shirebrook-based Frasers Group has announced a £26.8m cash deal to buy Accrington-based online retailer Studio Retail Group out of administration.

It protects the jobs of more than 1,500 staff.

The business revealed it had appointed Daniel Francis Butters and Daniel James Mark Smith of Teneo Financial Advisory Limited as joint administrators of the company yesterday (February 24), having announced its intention to appoint administrators on February 14.

Following their appointment, the administrators revealed they were in advanced discussions in relation to an accelerated M&A process for the business and assets of the company, including its main operating subsidiary Studio Retail Limited.

The company announced this morning that it has sold its shareholding in Studio Retail Limited, and certain other assets, to Frasers Group, its biggest shareholder.

The deal involves the release of the company from its liabilities to its secured creditors under its revolving credit facilities and ancillary facilities.

The administrators said the transaction was in the best interests of the company’s creditors as a whole.

While Studio Retail Limited, itself, was not in administration, it had temporarily ceased taking orders and the transaction will allow trading operations to resume, ensuring continuity for suppliers, the group’s employees, pension holders and customers.

Frasers Group said it has agreed to act as guarantor in respect of certain payments of the SRG group pension scheme.

Daniel Smith, joint administrator, said: “This transaction preserves the Studio brand and the jobs of its employees, providing them with stability and a platform for growth in what continues to be a challenging retail environment.

“We would like to thank all employees and other key stakeholders for their support through this process.”

Studio Retail Group’s shares will be cancelled this morning.

The online retailer announced last week that it was calling in administrators after failing to land a £25m lifeline from its lending banks.

Studio Retail Group reported in January that it had a surplus stockholding which required additional working capital funding while it was sold through to customers.

The company requested a short term loan of £25m from its lending banks to fund the surplus stockholding, which it believed was “sufficient” to enable it to sell through the stock to customers.

Following discussions with its UK lenders, the business was unable to reach agreement with them to provide the additional funding Studio Retail Group required.