Private equity comes to the rescue of struggling Alexon

Alexon, which employs 2,700 staff across more than 990 outlets, was bought by Sun European Partners, owner of sofa chain ScS, in a pre-pack administration deal for an undisclosed sum. The widely-expected sale comes shortly after Alexon, which owns brands including Dash and Eastex, suspended its shares after it failed to find a solution to its funding problems.

The firm, one of a number of retailers hit by a consumer spending squeeze, warned earlier this month that profits would be “well below” expectations following a sales slump.

Will Wright, joint administrator and restructuring director at KPMG who led the sale, said Alexon had received a “great deal of interest”.

The deal means unsecured creditors, including suppliers and HM Revenue & Customs, will lose a combined total of £12m, while its lender, understood to be Barclays, loses around £15m.

Shareholders have been wiped out by the administration.

The company suspended its shares at 2.8p, giving Alexon a market value of around £4m.

Alexon’s woes come shortly after fashion chain Jane Norman fell into administration.

Edinburgh Woollen Mill bought 33 stores but no buyer was found for a further 35, impacting on 290 jobs.

Alexon, like Jane Norman before it, has struggled with its cash position amid falling sales and had been considering a number of options to restructure the business.

Jane McNally, Alexon chief executive, said the deal will enable the business to invest in its turnaround strategy, through restructuring stores and speeding up developments in its online busi-ness.

Lawyers from DLA Piper’s corporate and restructuring teams in Leeds advised Sun European Partners on the acquisition.