Administration likely if Hotter Shoes group is unable to source new funding

The board of Unbound Group confirmed this afternoon (July 12) that the business would go into administration if restructuring plans, including an equity raise, fail.

In May this year the group, which includes Skelmersdale-based Hotter Shoes, revealed it had engaged turnaround specialists from Interpath Advisory after Marwyn Investment Management withdrew its £10m fundraising offer over concerns about current trading.

Just over a week later, Unbound announced it was offering itself for sale.

But late last month (June) the business admitted that hopes of a sale were fading and turnaround specialists were considering a formal restructure.

Then, four days later, Unbound said it was considering an equity fundraise of between £1.5m and £2m after formally closing its sale process having receiving no offers that the board “considered capable of receiving shareholder and wider stakeholder support”.

The company said it was in talks with its bankers regarding potential and expected breaches of its loan covenants and any deal would have to be acceptable to them, which has also created “liquidity constraints” and the company needs the bankers to waive “certain covenants under existing borrowing facilities”.

Turnaround expert Interpath was advising the board on a strategic review process in respect of the group’s main operating subsidiary, Hotter Shoes, which could be sold off separately.

However, today, Unbound issued a statement to the stock exchange which said: “The board notes recent press speculation regarding possible administration of the group as one of a number of options that the company is considering.

“Consistent with the strategic review initiated by the board and previous announcements, the board and the company’s advisers continue to explore options for the group and its shareholders, which include a formal restructuring plan and equity raise.

“In the event that such discussions prove unsuccessful, it is likely that administration would occur, in which case the company’s ordinary shares would be suspended from trading on AIM.”

It added: “The board will continue to provide further updates as appropriate.”

Hotter Shoes has been manufacturing shoes at its factory in Skelmersdale, Lancashire since 1959 and the company boasts that it crafts shoes “in one of the most technologically advanced factories in the world”.

It currently trades from 17 standalone stores and just under 10 concessions in garden centres.