Oddbins' Baile says CVA 'best way forward'

Published: 18 March, 2011

Oddbins' Simon Baile is urging suppliers to vote for a company voluntary arrangement as the "best possible way forward."

In an interview with Harpers Wine & Spirit he said directors had chosen to opt for a CVA over "the easy option" of administration, as it allows the business to continue trading and "try and ensure there's a profitable Oddbins going forward".

He said he wanted to "try and make sure our suppliers, who we are damaging through this process, could allow me the opportunity to trade with them in the future, and administration doesn't allow them the opportunity to profit in the future".

He apologised to staff and suppliers over the 39 store closures and laying off 120 staff, describing the move as "sad and regrettable".

Money owed

While there may be a certain willingness to help the beleaguered retailer from the wine trade, HMRC is owed £8.6 million, and the outcome of the CVA hangs in the balance with their vote.

Commercial landlords may also be less understanding. Baile said some might find the process "difficult to stomach", but others might consider it better than trying to attract new tenants with "all sorts of incentives". "They don't have to do that with this, they just have to give us some relief for a period of time." The CVA means landlords will get 70% rent until Christmas 2012, at which point it will go back to its original level.

In a 19-page list of creditors, De Bortoli Wines is owed £107,000, Diageo GB £84,000, while Concha y Toro has £242,000 outstanding and Hatch Mansfield is owed £310,000.

He said staff morale was "up and down" but that he'd been humbled by the positive support from both staff and suppliers.

Baile urged creditors to accept the deal, which offers them 21p back on every pound they are owed. "We do believe firmly that this is the best way forward," he told Harpers.

Oddbins is currently involved in a high court case against former owner Castel Freres relating to redundancy liabilities of former staff. Baile said this has held Oddbins back since taking over, as it had to take on a much larger cost base than it was prepared for.

Turning the business around

Baile admitted that turning the business around "seems difficult on paper". But he said sales figures for the stores it was keeping were "incredibly durable", adding, "what we sell is good, the price we charge is fair, the service we give is great, the knowledge we have is fantastic and the customer base is pretty loyal".

Deloitte has said creditors could receive 13.6p in the pound if the business goes into administration. But Baile, comparing this figure to money received when First Quench collapsed in 2009, said: "I'm not sure many people have been paid out (after Threshers demise), the last figure I heard was 2p in the pound and I'm not sure that's been paid out.

"I'd suggest this 13.6p is a nominal figure, based on what we see today. We all know in the trade that what we might see today is not quite the reality of tomorrow, and these processes have a habit of taking a long time."

He said the CVA has a "very clear payment schedule" which offered "a minimum of 21%, with the potential additional upside of 50% from the court case (with Nicolas) if we get some relief."

Some stores have already closed, and Oddbins will hand keys back to landlords on the remainder of the 39 worst-performing sites by March 24. Baile said although "brutal", the move meant it could dispose of its liabilities all in one go. "To work down 39 stores from the portfolio and try to sell them off over time is just not sustainable," he added.

Creditors will vote on the CVA, which need a 75% majority to be passed, on March 31, and Deloitte will announce the results on April 4.

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