Mon, 05 Dec 2011 | BUSINESS SALE
Less than two weeks after warning of expected losses over the Christmas trading period, outdoor clothing retailer Blacks Leisure is now seeking a rescue deal.
The troubled retailer is thought to be in talks with a selection of firms that handle distressed debts.
Low sales in the autumn and a hefty debt pile mean that Blacks is now seeking fresh funding and are in need of £20 million of cash immediately. The profit warning announced on 25 November also led to a steep drop in shares to less than 2p.
Blacks also has the matter of its £40 million of loans due in February 2012 to Lloyds Banking Group to deal with, which it will need to refinance.
KPMG has been brought in to assist the retailer - which operates 300 outlets in the UK - with a rescue plan, though the options available are few. It has been predicted that Lloyds will be unwilling to pump more cash into a business that has been struggling to stay afloat for years.
Another issue is that its largest shareholder, Mike Ashley, will not support its fundraising plans. A CVA is another unlikely option as it went through the procedure two years ago.
A rescue deal with a distressed business specialist may be its only option - however, in such a scenario Lloyds would battle to recover its loans.
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