Donnybrook Fair was in breach of banking covenants ahead of sale
Owners were exposed to €6.3m bank guarantees on top of money they were owed by the business
Joe Doyle, who sold the Donnybrook Fair group to Musgrave Group last year. Photograph: Eric Luke
Financial statements filed recently for Donnybrook Fair reveal the financial pressure the upscale food retailer was under as its former owners, Joe and Mary Doyle, were trying to sell the business at the beginning of last year.
According to its accounts for the year to the end of last January, at the time that the Doyles were exploring a potential sale of the business to Dunnes Stores, Donnybrook Fair was in breach of its banking covenants. The business was eventually sold to SuperValu’s owner Musgrave last September.
Sales during the 12-month period covered by the accounts fell by 6.6 per cent to €26.3 million, as the business blamed disruption caused by building works near one of its outlets, as well as increased competition from more mainstream, larger food retailers that were moving upmarket.
The group, which operates five supermarkets in the greater Dublin area and a food production facility, made a loss of more than €870,000 in the period, compared to a profit of €128,000 the previous year, although the 2017 figure had been boosted by a one-off gain from the sale and leaseback of one of its stores.
The group had total assets at the beginning of the year of €16.9 million but liabilities of €15.4 million.
“The financial year proved to be challenging from a sales perspective,” the Doyles said in a directors’ note attached to the accounts.
The accounts also lay bare the potential financial exposure of Mr and Mrs Doyle during the period covered by the accounts. The business had loans of €9.6 million, most of it bank debt, but with a significant chunk of cash also owed to the directors.
The Doyles had provided personal guarantees of €6.3 million to Bank of Ireland. A note to the accounts says the couple had also given the bank charges over other properties personally owned by them.
The couple put a nominal value of about €11.5 million on the business in a restructuring of the group last February.
It is understood that the subsequent deal to sell it to Musgrave is potentially worth up to €25 million, including the €10 million in Donnybrook Fair debts that Musgrave took over, as well as a potential sum of up to €15 million that the Doyles could eventually receive for their shares, if the business hits stringent targets.
Joe Doyle has stayed on to run the business under Musgrave’s ownership.