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Cash strapped Conviviality looks to equity fundraise to meet £30m tax bill

Published:  16 March, 2018

Cash strapped wholesaling group Conviviality has announced it is in talks to begin equity fundraising in to plug a £30m tax shortfall which is due on March 29.

In a short statement released this morning, the owner of Wine Rack, Bibendum, Bargain Booze and Matthew Clark said it has engaged with HM Revenues and Customs on the subject of the tax bill which led the company to announce its shares had temporarily been suspended from trading on the Alternative Investment Market (AIM) earlier this week.

Today’s update follows an initial statement from the company on Wednesday which revealed that short-term cash flow projections and had created a “short term funding requirement”.

This in turn came on the heels of a profit warning the week before, after a trading statement revealed adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) was expected to come in 20% below market expectations somewhere between £55.3 million and £56.4 million.

The company blamed an “error in the financial forecasts of the Conviviality Direct business and the assumption that the margin weakness seen in January and February [would] continue for the remainder of the current financial year”.

More than £300 million was subsequently wiped off Conviviality’s value.

Today the company said it is seeking to potentially address the tax bill via an equity fundraise to effect a “recapitalisation of the business” while auditing firm PwC undertakes a review of the company's funding requirements.

It said it is also “actively engaging with its stakeholders" as well as continuing conversations with HMRC, which has been "receptive to our needs”.

Conviviality has been growing aggressively since it was was first listed on the AIM in 2013, with multiple acquisitions across the on and off-trade sectors.