Atlantic rescue plan approved

Tue, Sep 18, 2012, 01:00

THE RESCUE plan for DIY chain Atlantic Homecare, approved yesterday, includes a saving of between €4 million and €5 million on its annual rent bill.

The plan, approved by the High Court, will see the chain’s unsecured creditors receive 32 per cent of the money due to them.

This includes debts to other companies in its parent group, Grafton, which are owed a total of €53.6 million, according to figures provided to the court by examiner Declan McDonald.

The High Court approved the survival plan for the Grafton subsidiary after hearing that its creditors supported Mr McDonald’s scheme.

He was appointed in June, when the company was placed under the High Court’s protection from its creditors. Most of its stores were trading at a loss and Grafton blamed high rents for the problems threatening the business.

The rescue plan involves the loss of 44 jobs, 70 less than anticipated in June, and the closure of just two stores, instead of the five originally proposed. This will cut the number of Atlantic stores to 11 from 13. The numbers employed will fall to 304 from 348.

Landlords of three of the five stores originally earmarked for closure have agreed to accept lower rents. It is understood that the survival plan involves savings in Atlantic’s rent bill of between €4 million and €5 million a year – close to the amount that the business was projected to lose this year.

That figure includes savings made on the closure of the two outlets in Limerick and Newbridge, and on reduced rents agreed by its remaining landlords.

The figure represents a near halving of Atlantic Homecare’s rent bill, which was quoted at €10.5 million in June.

Fellow Grafton subsidiary, Woodies, which had been providing financial support to Atlantic, will invest €5.7 million in the business.

Mr McDonald’s figures show that had Atlantic been wound up, creditors would have lost more than €79 million. Its parent group and its landlords would have suffered the biggest losses.

The examiner estimates that a liquidation would have left Atlantic Homecare with liabilities of €59 million to its landlords resulting from lease disclaimers and additional damages actions.

Atlantic’s directors sought the examinership in a bid to rescue the company. It had accumulated losses of €21 million over the previous five years, but had been able to stay in business with the support of other Grafton Group companies, in particular Woodies DIY, the court heard. The company did not have cash-flow issues.

Yesterday counsel for the examiner, Bernard Dunleavy, told the court the examinership process had resulted in a better outcome than had been originally anticipated.

Mr Justice Ryan said that the plan was “perfectly reasonable” and he had no hesitation in granting approval. He noted that creditors seemed to get more out of the scheme compared to other examinerships.