Headlam Group set for administration after failed turnaround
Headlam Group has filed a notice of intention to appoint administrators, after the flooring distributor said it had been unable to execute its transformation plan in time to address its liquidity position.
The notice names Will Wright, Chris Pole and Ryan Grant of Interpath as proposed joint administrators, following a strategic review launched on 14 July.
The Coleshill-based company said it had pursued a range of options to address its financial position, including refinancing, asset disposals and other strategic alternatives, and that its board had “worked hard over an extended period to explore and evaluate multiple potential solutions”, resulting in a comprehensive transformation plan.
However, in an update to the London Stock Exchange, Headlam said that against a market backdrop that “continues to be challenging”, the business had been “unable to execute on that plan in time.”
The update said: “As a result, the company has now exhausted the liquidity available under its existing facility (which resulted in breaches to its month-end covenants), and ultimately the scale of the losses incurred, and projected in the short term, has made the challenge too great to overcome. Consequently, despite these extensive efforts and in the absence of other suitable alternatives, the board considers the proposed administration to be the only viable option.”
The filing gives the group and its creditors a period of protection while discussions continue with stakeholders. Unless circumstances change, the board intends to appoint administrators within five business days. A notice of intention is also expected to be filed for subsidiary HFD Limited.
Headlam has requested that its shares be suspended from the Official List and from trading on the Main Market of the London Stock Exchange, with effect from 7.30am today.
The update follows Headlam’s completion last week of the sale of its Netherlands operations to a company managed by Rcapital Partners, part of its wider strategic review, and comes after a period of boardroom tension earlier this year, when activist investor First Seagull sought to remove three directors.
