Arnotts pursues solution to €368m debt
Dublin store unveils strategy on IBRC loans
Arnotts’ other lender, Ulster Bank, is participating in the restructuring process. Photograph: Bryan O’Brien
Arnotts is working on a plan to restructure its €368.6 million debt. This includes securing a potential acquirer for the loans to the company held by state-owned Irish Bank Resolution Corporation (IBRC), which is in liquidation.
Arnotts has engaged financial group Investec to seek a potential acquirer for the IBRC loans as part of a wider a process aimed at reducing its debts to a sustainable level. The company’s other lender, Ulster Bank, is participating in this process.
Arnotts chairman Nigel Blow told The Irish Times that its corporate adviser Investec had identified “four or five” groups interested in helping the company refinance its loans with IBRC. These are a mix of financial and trade players and indicative bids are due by the end of August.
“We have engaged Investec to try and activate an outcome that would be desirable for the company,” said Mr Blow. “We are confident that we will find an investor from the process that will be right for the company and right for Ulster Bank.”
It is understood that Ulster Bank remains supportive of the business and will participate in an overall restructuring of the company’s balance sheet.
Under the terms of IBRC’s liquidation, its loans to Arnotts must be sold by the end of this year for no less than current market value or be transferred to the National Asset Management Agency to be worked through over time.
Mr Blow said having the IBRC portion of its loans transferred to Nama would not be the “ideal option” for the company “but we have to be conscious that this might happen”.
Mr Blow stressed that the company was not for sale as this activity relates solely to restructuring its loans.
IBRC’s loans to Arnotts are some €230 million while Ulster Bank is owed about €140 million.
Mr Blow said Arnotts Holdings Ltd reduced its losses to just over €3 million for the year to the end of January 2013 compared with €19.4 million in the previous 12 months.
Sales, which include concession operators, fell by 1.4 per cent to €117.2 million. This reduction reflected the fact that there was an extra week of trading in the previous year and the effect of discontinued operations, notably its former outlet in Stillorgan.
Mr Blow said like-for-like sales were actually up by 2 per cent.
However, furniture sales remained weak while like-for-like sales at its Boyers subsidiary fell by 3 per cent due to a decline in footfall and “aggressive discounting” by rivals.