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Focus goes into administration

Focus, the do-it-yourself and gardening retailer, has gone into administration putting 3,920 jobs at risk.

The 178-store chain has appointed Ernst & Young as administrator. Simon Allport, one of the administrators, said: "Focus will continue to trade as we look for a buyer for the group and its stores. It is very much business as usual." He said the company has struggled due to low consumer confidence and a very weak housing market.

"Despite management's actions to tightly control costs and restructure the operations, unfortunately it has not been possible for the business to continue to trade outside of insolvency," Mr Allport said. The company, run by former Iceland boss Bill Grimsey, warned last night that it had defaulted on a loan and was preparing appoint an administrator.

There are a number of potential buyers for the business which was founded in 1987 and has annual sales of around £450m.
Chris Dawson, the owner of The Range homewares chain, said last night he would be interested in buying Focus, its stock and its stores "if the price is right".
Focus said in a statement last night: "Following notification of an event of default under the senior credit facility, and a realisation that there were no alternatives that could be explored any further, Focus directors have come to the conclusion that to protect the interests of creditors they have no choice but to seek protection through filing a notice of intention to appoint administrators.
"The directors have sought consent from the business's lenders to appoint E&Y as the administrators. All stakeholders including staff are being informed."
Focus is majority owned by Cerberus, the private equity firm. It bought Focus in 2007 from Apax Partners, Duke Street Capital and chairman and founder Bill Archer for £1.
At the time Mr Grimsey said: "Focus has the potential to be one of the most successful operators in the DIY sector."
The company carried out a company voluntary arrangement in 2009, a controversial alternative to administration under which creditors are asked to accept reduced terms.

Focus's lenders include GMAC Financial Services and HBOS. Goldman Sachs and the retailer's management held some of the equity as recently as last year, however it is unclear whether they still do.

A survey from Deloitte shows that the number of retailers falling into administration in the first quarter of this year increased by 30pc compared to last year.

Source : The Telegraph

05 May 2011
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