Office supplies giant in crucial talks on future

ONE of Britain’s biggest office supplies firms which employs 1,400 people, faces collapse this week if crucial talks to secure its future do not succeed.

Sheffield-based Vasanta Group, which has been hit by the withdrawal of credit insurance to key suppliers, held an emergency board meeting yesterday as directors sought new funding for the business.

Vasanta, which supplies stationery, furniture and computer equipment to retailers and consumers, was formed in 2007 following the merger of Kingfield Heath with computer supplies firms ISA and Supplies.

With annual sales of £523m and profits of £31m, it is run by chief executive Richard Martin and a management team who stand to lose their £8m investment in the business if it fails.

The group is owned by quoted private equity group Electra Partners which has written off its investment in the company and today said that its investment in Vasanta is now valued at £1.5m and it represents just 4p of its 1,512p net asset value.

It is believed that accountants PricewaterhouseCoopers (PwC) has been lined up to act as administrator to Vasanta Group with reports suggesting the business could collapse this week unless the new funding is agreed.

Prospective investors including Alchemy Partners, the private equity group, have been approached about putting together a rescue deal and Electra is thought to have proposed a deal to inject more capital into Vasanta but its major lenders, including Royal Bank of Scotland and Bank of Ireland are thought to have rejected it.

In its results to the end of March, Electra said: “In the case of Vasanta, the removal of credit insurance led to a significant increase in the company’s debt levels with a corresponding decrease in the equity value of the investment.”