Peacocks still searching for white knight

Kasmira Jefford
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PRIVATE EQUITY firms and buy-out groups are poised to make a bid for Peacocks, the discount clothing chain, which collapsed into administration last week.

Its administrators KPMG will open the data room to Peacocks today, which will allow potential bidders to browse financial and other relevant data on the firm. KMPG expects to receive the first round of bids by Monday 31 January.

As many as 50 bidders are said to have expressed an interest in the beleaguered retailer, which owns 611 stores and employs 9,000 people – either as a going concern or for parts of its estate and its stock.

They include Edinburgh Woollen Mills, which bought a third of retailer Jane Norman’s stores out of administration last June, and private equity firm Sun European Partners which is thought to be considering a bid for the entire business. OpCapita, currently buying Comet from electricals firm Kesa, is also said to be interested.

A judge is today expected to give the go-ahead for Peacocks’ sister chain Bonmarche to be bought by Sun European via a pre-pack administration, in a deal that would safeguard some 380 stores and 3,600 staff.

The administration of Peacocks is one of the biggest since Woolworths went down in 2008 and strikes yet another blow to the UK high street, which has seen La Senza, Past Times and Barratts Priceless fall victim to tough conditions and a weak consumer environment.

Last week, Chris Laverty, joint administrator and restructuring partner at KPMG, said: “Like many retailers Peacocks has suffered from tough economic conditions, which have seen its customers reduce their spending on the high street.”

A total of 249 staff, almost half of Peacocks’ head office workforce in Cardiff, were made redundant last Thursday. However, strong interest in the firm has raised hopes that KPMG may indeed find a buyer to rescue the remaining jobs.

The chain collapsed after rescue plans, including injecting fresh equity and a debt-for-equity swap, ultimately failed. The company has borrowings of £700m while it made sales of only £720m in the year to April 2010.

Peacocks Penny Bazaar was founded in Warrington by Albert Peacock as a family-run business selling a range of cheap goods.

Robert Peacock, the founder’s grandson, appoints Richard Kirk ­– formerly managing director at frozen food chain Iceland ­– as chief executive to help prepare the business for a sale or float.

Peacocks is sold to Cinven, the private equity firm, netting Robert Peacock and his business partner, Hugh Child, who together own an 80 per cent stake, £36m.

The 280-store firm lists in London with a market value of £155m and £20m debt. Kirk makes £3.4m while Cinven triples its money.

Richard Kirk leads a £400m management buy-out, supported by Goldman Sachs and hedge funds including Och-Ziff and Perry Capital, who together put up £160m in debt in exchange for a 55 per cent of the new holding company. Kirk lands a windfall of £26m, but leaves half in the business.

Investors attempt to restructure Peacocks’ complicated finances. The firm then puts itself up for sale with a price tag of around £500m but calls off the sale after bidders were not prepared to meet the asking price.

Peacocks goes into administration, after the company and its syndicate of debt and equity lenders fail to restructure its £700m debt. Richard Kirk is set to lose his £13m investment.