Conviviality has announced it urgently needs to raise £125m to avert bankruptcy as it issued its third profit warning in a single month.
In a statement the off-licence retail group confirmed that through its broker, Investec Bank, meetings with institutional investors have been arranged for the coming days to effect an equity placing (the placing) to raise the funds.
The company said the placing would resolve overdue payments for creditors, settle payments with HMRC including the £30m tax bill and to provide “working capital headroom and fund costs associated with the work undertaken to recapitalise the business”.
Conviviality also confirmed it is continuing to explore other funding alternatives in case the placing is unsuccessful, however it warned that if it is unable raise the funds through placing or otherwise “it is unlikely to be able to trade on a going concern basis”.
The update comes quickly after the resignation of its CEO Diana Hunter on the 20 March following the company uncovering a a surprise £30 million tax bill due to be paid in less than a fortnight on 13 March.
On the 13 March 2018, Conviviality announced it expected adjusted EBITDA for the year ending 29 April 2018 to be in the range of £55.3m – £56.4m. In addition, net debt was expected to be £150m as at 29 April 2018.
Assuming the placing is successful, Conviviality announced it would expect that the adjusted EBITDA for the year ending 29 April 2018 to be in the range of £45.5m to £46m and net debt to be below £100m.