Sun Capital buys Dreams out of administration

 
Kasmira Jefford
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DREAMS, the UK’s largest beds chain, was sold yesterday to private equity firm Sun Capital Partners, safeguarding over 1,600 jobs but leaving 400 more at risk.

The investment firm has beaten off competition from Dreams founder Mike Clare to buy 171 of Dreams’ 266 stores, its head office and two manufacturing sites, for around £35m.

Administrators Ernst & Young yesterday said the remaining 95 stores will remain open for business as it seeks to find buyers for them.

Clare, who sold the retailer to Exponent private equity in 2008 for £222m and has failed in his bid to buy back the firm, said he was already making plans “to rescue as many of the stores” and jobs remaining as possible.

Dreams was put up for sale by Exponent earlier this year after its lenders, led by Royal Bank of Scotland and Barclays, put pressure on its owners to refinance the business.

Joint administrator Alan Hudson said like many of its peers, Dreams “has suffered as a result of this depressed retail environment, a rapid expansion of its store portfolio and onerous lease liabilities”.

He added that a decline in like-for-like sales across its portfolio as well as its operating margins being squeezed had resulted in Dreams entering adminstration.

ADVISERS ERNST & YOUNG

STUART DEACON
ERNST & YOUNG

Stuart Deacon, a senior director in Ernst & Young’s transaction advisory services business, led the sale of Dreams to private equity investors Sun Capital Partners.

The beds chain was sold though a pre-pack administration, which involves a buyer for the business being lined up before it enters insolvency proceedings.

Partners Alan Hudson, Joe O’Connor and director Craig Lewis acted as the bed chain’s joint administrators.

A qualified chartered accountant, Deacon has over 10 years of corporate finance experience and leads Ernst & Young’s national Accelerated Mergers and Acquisitions (AMA) team, working within the restructuring practice to provide sell side support and advice in complex restructuring scenarios.

He has worked on a number of retail restructurings, and recently advised on the sale of youth fashion chain Republic, which was bought out of administration last week by Sports Direct.

In March last year, Deacon also acted on the sale of World Design & Trade Co’s wholesale division, including the Firetrap brand, to Sports Direct after the business collapsed into administration.

Deacon also advised on the sale of fashion chain AllSaints Spitalfields to private equity firms Lion Capital and Goode Partners in 2011.

Ernst & Young was instructed to find buyers for the stakes held by Kaupthing and Glitnir, the collapsed Icelandic banks.