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For Immediate Release |
23 September 2009 |
Blacks Leisure Group plc
Standstill Arrangements & Administration of Sandcity
Execution of standstill arrangements
Further to the announcement made by the Company yesterday regarding an expected breach of one of its financial covenants under its bank facilities, the Company is pleased to announce that it has now entered into a formal standstill agreement with its bank, Lloyds Banking Group, in respect of this covenant breach until 30th November 2009. As previously announced, the standstill is subject to the Company delivering a restructuring plan, acceptable to the bank, addressing the future viability of the group, including actions to achieve an exit of the Company's loss-making stores, by 30th October 2009.
Administration of Sandcity Limited
Over the last 18 months, the Company has been reviewing options to exit from its loss-making Boardwear division. As part of this review, the Company has successfully exited the O'Neill wholesale business, converted a number of stores from Boardwear to Outdoor fascias, and reduced the cost base through a consolidation of the Sandcity and Freespirit management functions. A disposal of the Boardwear business has also been pursued but serious interest in this business was low and structural issues made a discrete sale of this business difficult to achieve.
The Company announces today that Richard Fleming and David Costley-Wood of KPMG LLP have been appointed as administrators in respect of its wholly owned subsidiary, Sandcity Ltd ("Sandcity"). This follows a review by the directors of Sandcity which has concluded that there is no reasonable prospect of restoring profitability in the medium to long term and that Sandcity is no longer in a position to trade as a going concern. Sandcity is part of the Boardwear division and is a retailer of predominantly lifestyle and boardwear clothing and accessories. It operates out of 11 stores, which trade at a substantial loss.
The appointment of administrators of Sandcity results in an exit from approximately one third of the Company's Boardwear division. The Directors believe that the administration of Sandcity will not have a material effect on the Company's other businesses which continue to trade normally.
Lloyds Banking Group is supportive of the actions the Company is announcing today and has given its consent to Sandcity being put into administration.
Trading Update
As announced yesterday, the group has underperformed against budget for the first six months of the financial year to August 31st 2009. Whilst the Directors believe, partly as a result of the action being taken in relation to Sandcity as described above, that current market expectations can still be met (before taking into account the effects of any restructuring plan and the associated costs), this will be dependent on the bank waiving the expected covenant breach and on trading during the key Christmas period.
A further announcement will be made in due course. The interim results are expected to be published towards the end of October 2009.
- Ends -
Enquiries:
Blacks Leisure Group plc 01604 597 222
Neil Gillis, Chief Executive
Citigate Dewe Rogerson 020 7638 9571
Simon Rigby
Kevin Smith
Singer Capital Markets 020 3205 7500
Jeff Keating
Jos Trusted
This information is provided by RNS
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