Conviviality breakup likely as £125m fundraiser fails

By Andrew Catchpole

Published: 28 March, 2018

Conviviality Plc has failed to raise the £125 million needed to recapitalise the business following a tumultuous month which saw three profit warnings, its market value tumble, shares suspended and the departure of CEO Diana Hunter.

Conviviality is now heading for probable breakup, with PricewaterhouseCooper likely to be appointed as administrator to deal with the fallout of one of the biggest collapses that the UK drinks world has seen.

In a statement released early this evening, Conviviality’s board announced: “Despite a significant number of meetings with potential investors resulting in good levels of demand, and constructive discussions with a number of key customers and suppliers regarding the provision of support, there was ultimately insufficient demand to raise the full £125 million.

“The Company is in discussions with its lending banks and advisors regarding other possible options and is in receipt of a number of inbound enquiries regarding a potential sale of all or parts the business.”

In addition, it stated that shareholders would likely receive “little-to-nil” value.

Conviviality had needed to raise £125 million, and fast, with financial and accounting errors being revealed over recent weeks, including an “arithmetic error” of some £5.4 million, soon to be compounded by an unforeseen £30 million tax bill.

Some £300 million was wiped off the value of the company before trading of shares on AIM was halted.

CEO Diana Hunter resigned on 19 March, a day after the Financial Times jibed in a headline “maths tutor needed” before Conviviality continued to trade, as the company scrambled to pull a rescue package together.

The fall of Conviviality, which counts leading UK wholesalers Matthew Clark and Bibendum, plus high street retail estates such as Bargain Booze and Wine Rack among its many facets, will undoubtedly have a major impact on the UK trade, including many suppliers that will have been hit by unpaid invoices and the challenge of routes to market.

Thousands of jobs also hang in the balance, with franchisees and employees across the company now having to wait out what could be an extended period of uncertainty as buyers are sought for various arms of the business.

Harpers will bring further updates as more details emerge.

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