Allders edges to brink of collapse

DEPARTMENT store chain Allders could be put into administration as early as this week with the loss of thousands of jobs.

It is understood that corporate recovery firm KPMG has been lined up to manage the administration process and get the best deal for creditors.

Allders, which employs 7,500 people in its 45 branches, was taken private in 2003 but has struggled with poor store locations and tough trading conditions.

Retail turnaround specialist Hilco took on £90 million of debt in Allders last week from investment bank Lehman Brothers, a 20 per cent shareholder in Scarlett Retail, Allders' parent.

Hilco now has a major say in the future of Allders alongside Barclays, the chain's principal bank, which has a £50 million loan facility in place. If they refuse to put in further money it could trigger administration.

Scarlett Retail's majority shareholder is property group Minerva, with a 60 per cent stake, while Allders' chief executive Terry Green and finance director Phil Cox own 20 per cent.

Sources close to Allders said Green and Cox will meet Hilco tomorrow or Tuesday, when they will be told the fate of the business. Last week, Financial Mail revealed that Jon Moulton, head of private equity group Alchemy Partners, had looked at the retailer's figures and was keen to buy the branches.

But he has decided to wait to see if Allders goes into administration. He said: 'In the event of administration, we would bid for the company. We would pitch for a going concern.'

One potential obstacle to any deal being completed quickly is Allders' pensions deficit. It was £14.5 million in 2003, but sources close to the company say it now stands at about £7 million.