Unbound Group to appoint administrators after suspending share dealing

Unbound Group, the parent of the Skelmersdale-based Hotter Shoes brand, will appoint administrators and has suspended its shares on AIM after failing to conclude a rescue deal for the struggling business.

It warned last Wednesday (July 12) that it could go into administration if restructuring plans, including an equity raise, failed.

Today (July 17) it confirmed the intention to appoint Will Wright and Rick Harrison of Interpath Advisory as administrators to OpCo, which is Beaconsfield Footwear, the main operating subsidiary which includes Hotter Shoes.

In May this year the group 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.

On July 12, Unbound issued a statement responding to press speculation, admitting administration was a possibility.

And today, the board admitted the game was up, saying it is now required to take the necessary steps to preserve value for the group’s creditors and avoid OpCo trading insolvently, and intends to appoint Interpath Advisory as administrator.

Unbound said: “It is currently expected that, following their formal appointment, the administrators will implement a sale of the trade and assets of OpCo to a third-party purchaser as soon as reasonably practicable thereafter. There can be no certainty that any such sale will proceed or as to the terms or timing of any such sale. Any such transaction would result in no value for the company’s existing shareholders.”

It said the group is not a trading company and has no operating revenues. The company currently has minimal cash balances and known creditors of approximately £0.9m.

While the company holds certain investments that the board believes are likely to have a value in excess of the amounts due, it is also likely to take some time to realise these assets. So, in light of the latest developments, there is uncertainty as to whether the company is able to pay its debts as they fall due.

The board has, therefore, requested a suspension of trading in the company’s ordinary shares on AIM with effect from 07.30 a.m. today pending clarification of the company’s financial position. The board is now reviewing the options available.

Notice of the company’s annual general meeting has been posted to shareholders. It will be held on July 31, at the London offices of Singer Capital Markets.

The Notice of AGM does not include a resolution to receive the annual report and accounts or, consequently, to approve the re-appointment of RSM UK Group as auditor, as the company’s annual report and accounts for the year ended February 5, 2023 had not been approved by the board at the date that the Notice of AGM was posted. A separate general meeting will be held as soon as practicable to consider these resolutions as and when the annual report has been approved by the board.

The company will continue to work with RSM as auditor, however, the board now considers it highly unlikely that the annual feport will be published by August 5.