Banks prepare to give Arnotts extra €10m
ANGLO IRISH Bank and Ulster Bank are preparing to provide €10 million in additional working capital to retailer Arnotts to support the company.
Earlier this year the two banks provided €12 million in new working capital as Arnotts sought to restructure itself to meet the challenges of the recession.
Speaking to The Irish Timesyesterday, in his first interview since becoming Arnotts chairman on Wednesday, Mark Schwartz said the new funding would help to make the company “self-sufficient”.
“It is more than sufficient to support the working capital needs of Arnotts for the foreseeable future,” he said.
Earlier this week, Anglo and Ulster Bank got clearance from the European Commission to take joint ownership of Arnotts as part of a major debt restructuring deal.
The banks are owed more than €300 million, with State-owned Anglo on the hook for 55 per cent of that total.
Mr Schwartz said the banks were fully committed to Arnotts and there was “no timetable” for them to exit the business. “As we generate excess cash flow, we will use that to pay interest and pay down loans,” he said. “One has to take a long-term perspective.”
When asked about Arnotts’ likely future ownership, Mr Schwartz ran through some options. On the possibility of it becoming a public company again, he said: “That could be a possibility.”
On the possibility of looking for new investors, he said “perhaps”.
What about a trade sale, possibly to a large department store operator such as John Lewis in the UK? “We haven’t even discussed that yet.” He declined to be drawn on whether any unsolicited approaches have been received.
Mr Schwartz said there was considerable value in the Arnotts brand. “People don’t come here because
of the location or because we have other brands in the shop. They are coming here because Arnotts stands for something.
“There’s a lot of value in the name itself and in the heritage of the brands. That’s something we recognise.” Mr Schwartz added that he had visited Arnotts several times on visits to Ireland over the past 20 years. The American executive, who also heads private equity firm Palladin Capital Group, said sales had increased this year by “high single digits” and the company would be “ebitda [earnings before interest, tax, depreciation and amortisation] positive” this year.
“We need to focus on rebuilding the [retail] business.”.
He said “some additional directors” would be appointed over time.