US group to spend €8m on Clerys revamp

SHAREHOLDERS IN retailer Clerys have been told that Boston-based private equity group Gordon Brothers is spending €22 million to purchase the company’s debt from Bank of Ireland and for new investment in the O’Connell Street store.

In a letter from former chairman Eoin McGettigan, dated September 18th, they were also informed that Gordon Brothers was willing “to allow current shareholder participation in their investment programme and the store’s future, on terms to be agreed and advised over the coming weeks”.

Earlier this week it emerged that Gordon Brothers had agreed to pay €14 to €15 million to purchase Bank of Ireland’s €26 million debt with Clerys.

This would leave up to €7 to €8 million available for investment into the store.

While the O’Connell Street store was acquired by Gordon Brothers, the Guineys shop on Talbot Street and Clerys furnishing outlets in Leopardstown and Naas were closed.

The Irish Times has learned that a number of minority shareholders related to Denis Guiney, who himself acquired the business out of receivership in 1941, are angry at the events of this week.

This saw Clery Co (1941) plc placed into receivership on Monday evening before being sold to Gordon Brothers hours later. Other entities are being liquidated.

Shareholders were wiped out as a result of these transactions.

“We do not expect any surplus for distribution to shareholders from this process,” Mr McGettigan’s letter stated.

It is understood a number of them are considering legal action in relation to the matter.

Shareholders who asked not to be named claim they had not received any trading information since accounts were published for the year ended January 2011 and that no agm had been held this year.

In his letter, Mr McGettigan said the board had “no option but to allow the appointment of receivers”.

This followed 22 months of seeking to find new investors or strategic partners in “order to secure Clerys’ future.”

On September 14th, the board was “advised” that the group’s loans and security had been acquired from Bank of Ireland by a subsidiary of Gordon Brothers.

Mr McGettigan said a “formal and enforceable demand to repay those loans” was made on September 17th, which led to the appointment of the receivers.