Blacks Leisure on brink as shareholders face wipe-out

Blacks Leisure, the troubled outdoor retail specialist, edged closer to administration today after it confirmed it has failed to receive a takeover approach for its equity.

The update on its sales process sent shares in the group, which operates 98 Blacks and 208 Millets shops, tumbling by nearly a third, as it admitted shareholders are likely to be wiped out.

But Blacks said it had received bids for its trading businesses, assets and brands, which means the group is poised to be rescued through a pre-packaged administration in early January. This will allow a purchaser of the business to wipe out its debts and ditch unprofitable stores.

Trade buyers, including Edinburgh Woollen Mill, Go Outdoors, Mountain Warehouse and Sports Direct, are thought to have submitted bids to acquire all, or parts of, the company. Sports Direct, controlled by Mike Ashley, owner of Newcastle United football club, is the biggest shareholder in the outdoor group with a 22.5% stake.

The board of Blacks Leisure, which has debts of £36 million, was today set to hold a meeting to consider the offers. Accountancy firm KPMG is running the sale of the retail group and is expected to also carry out the pre-pack
insolvency procedure, which will be quickly followed by the sale of the business, or parts of it, in the first half of next month.

In a statement today, the retail group said: "A number of parties have submitted indicative offers to acquire the whole or substantially all of the trade, assets and brands of the group. However, the board notes that it does not have and does not now expect to receive an offer for the shares of Blacks Leisure."

Shares in the group fell by 0.6p, or 31%, to 1.20p today, valuing its equity at just over £1 million.

A potential trade buyer of the group, which owns the Blacks, Millets, Peter Storm and Eurohike brands, will almost certainly shut a large number of its 306 stores.

Suitors are also likely to close Blacks Leisure's head office and warehouse in Northampton, which costs the company around £26 million a year, including rent and staff wages.

Blacks warned on profits last month and made a loss of £16 million in the half year to 27 August.

The retailer narrowly avoided administration in late 2009 after it implemented a company voluntary arrangement, which enabled it to ditch about 90 stores.