Suppliers being 'asked to fund Oddbins rescue'

Published: 25 March, 2011

Oddbins suppliers are effectively being asked to finance the rescue of the business, some trade observers say - and helping to write off a £17.5 million bill for owners Simon Baile and Henry Young.

It has also been suggested that even if the company voluntary arrangement goes ahead - and creditors receive 21p in the pound, instead of the 13p anticipated in the event of an administration - the company could still be forced under by much tougher duty demands.

Ex Cellar Investments, Baile and Young's company which was used to buy Oddbins from Castel in 2008, agreed an instalment purchase price some £13 million more than a valuation of the business would have indicated. This took account of the fact that Nicolas UK had utilised some of the Oddbins assets elsewhere in its business.

So far, some £4 million of the purchase price has been paid by Ex Cellar. But under the terms of the CVA the company is not expected by many observers to make any further payments.
Baile renegotiated payments to Castel from £70,000 to £20,000 a week. He insists payments have been made on time and that a "deferred consideration" will still be paid to Castel if the CVA proceeds.

One senior trade figure said: "They haven't actually put a penny into the business - they've essentially been taking working capital out of the business to make payments. Creditors have in a very real sense been funding the acquisition of Oddbins and they're being asked to refinance the rest of the deal. And they're not getting any equity in the business."

Baile denies that Oddbins had also fallen into £6 million arrears with HMRC by last year and that a 10-month repayment plan was agreed, at £600,000 a month.

Sources say Oddbins struggled to keep up, and in November HMRC imposed tougher terms which meant immediate payment was required for anything released from bond.

An insider told Harpers: "The government obviously has a big part to play in whatever happens next. Even if HMRC votes yes to the CVA, they will ask Oddbins to put up a bond of about £3-£3.5 million just to cover duty liability, so essentially it would go straight into administration."

Baile dismissed this as "not correct and pure speculation".

Printer friendly version