Alexon rescued after pre-pack deal with Sun Capital gets the go-ahead

FASHION retailer Alexon has become the latest casualty of the economic downturn, going into administration before being sold to private equity firm, Sun Capital Partners.

The so called pre-pack administration with KPMG, which secures continuing employment for Alexon’s staff of about 2,700, was agreed yesterday after the firm failed to secure additional funding, leaving it unable to trade as a going concern.

Shares in Alexon, which trades as Ann Harvey, Kaliko, Dash and Eastex, were suspended earlier at 2.825p, valuing the firm at about £4.2m. The firm said last month it had net debt of £12.9m.

Alexon’s demise as a listed entity comes on quarterly rent day, when the fourth quarter’s rent is due to be paid in advance. Experts expect more retail failures as the tough consumer environment takes its toll on cash-strapped consumers. In August, Alexon said sales had fallen a further nine per cent, forcing the retailer to make its third profits warning since April.

The dramatic fall in sales and lack of shareholder appetite for capital raisings meant that Alexon’s lender Barclays could no longer extend the size of its banking facility.

Alexon’s board announced the group was exploring its options to shore up its finances. It also appointed KPMG to look at touting it as an acquisition target.

Sun European has made several retail investments in previous years, but this deal would be its first acquisition of a UK high street retailer. It owns the Dutch retail brands Scotch & Soda and V&D, and Neckermann, the German mail order fashion business.

MEET THE ADVISERS

WILL WRIGHT
KPMG

The team from KPMG acting as administrators for Alexon is led by Will Wright.

He has been working behind the scenes to ensure a deal that was acceptable to Sun Capital and Alexon.

He also led the team that wound up the Apollo chain of 2000 electrical stores which crashed into administration in 2009. More recently he was administrator for The Art Group, a Northamptonshire greetings cards, prints and frames seller which hit the buffers in 2010.

He also worked on the administration package of Leamington Desserts in Warwickshire.

KPMG has worked on a string of other administration cases in recent months.

KPMG this year sold the Scarborough-based Secure and Confidential Documents, in a deal that saved jobs. They were also administrators to Bridge Business Recovery (BBR).

The sale of Alexon to Sun European is in the form of a pre-pack administration. The Jane Norman fashion chain was sold under similar circumstances, with the administrator Zolfo Cooper pushing through that deal after the retailer hit the buffers.