Oddbins’ move to buy time to forge rescue package

Wine retailer Oddbins is to buy time for a rescue deal by applying to go into administration in what it described as a “purely precautionary” move to prevent creditors claiming against it in the next 10 days.

The application is seen as a tactical move to buy more time as it seeks to secure the future of the business.

The struggling off-licence, which recently shut nearly 40 stores, wants to restructure its debts through a company voluntary arrangement (CVA) – an alternative to administration – but needs the backing of 75 per cent of creditors at a meeting on March 31 for the rescue deal to go through.

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Oddbins said it had put in the administration application to protect it from creditor claims in the run-up to the meeting after it received a winding-up order from creditor British Gas.

An Oddbins spokeswoman said: “This is purely a precautionary measure to allow the CVA to take place.”

She added the move would allow Oddbins a “moratorium over any claims of 10 days, after which the results for the CVA vote will be known”. The voting results for the CVA, which has been put together by Deloitte, will be released on April 4.

The move reflects a tough period for the UK’s independent wine trade, which has seen Threshers and Wine Rack owner First Quench Retailing collapse in 2009 and the Unwins chain fold in 2005.

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Oddbins, which has sites in Leeds, Harrogate, Wetherby, Shipley, York and Sheffield, is under pressure amid competition from the dominant supermarket chains and falling consumer confidence.

It is also involved in a long-running legal spat with the group’s previous owner, French drinks group Castel Freres.

Simon Baile, whose father ran the company in the 1970s, took control of Oddbins in 2008. In December the group launched Oddies, a new smaller store concept.

Deloitte partners Lee Anthony Manning and David Smith were appointed CVA nominees to the company on March 15.

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As part of the deal Oddbins is proposing that 89 stores will pay 30 per cent less rent and 39 out of 128 shops will close with landlords receiving five months’ rent.

Only the profitable stores will be kept open.

Creditors are expected to receive 21p for every pound in the CVA, compared to 13p in an administration.

Oddbins has only made a profit once during the last seven years. Mr Baile has managed to cut the group’s losses since his takeover two and a half years ago.

The company reported a £67m turnover in 2009 and pre-tax losses of £4.5m, an improvement on the previous year’s £6.2m loss.

The pre-Christmas trading period proved difficult as the heavy snow hit trading.

Mr Baile said: “We firmly believe the CVA is the only way forward, we have got to streamline this company.”

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