Hot Features
Premium
Register for Free to get streaming real-time quotes, interactive charts, live options flow, and more.
Greeting cards retailer Clinton Cards (LSE:CC.) is anticipating to be placed under administration later this afternoon, after American Greetings Corporation, Clinton’s largest supplier, informed the company it wants to “enforce the loan” it acquired from the specialist retailer’s banks.
Trading of the publicly listed Clinton Cards were immediately suspended at the company’s request, saying further that it is not in breach of any financial covenant or repayment obligation under its credit facilities.
Unable to Pay
The company’s creditors, Barclays Bank and the Royal Bank of Scotland, informed Clinton Cards yesterday evening they had sold the £35 million loan to American Greetings.
“Whilst not party to the negotiations between the Banks and American Greetings, based on its discussions with American Greetings, the Board believed that, if the loan facilities were sold to American Greetings, American Greetings would enter into discussions with the Company with regard to its ongoing support for the business and expected it to extend the waiver of the technical breaches of the loan agreement.” Clinton Cards stated admitting at the same time that the company had been receiving temporary waivers over “some technical breaches of default” in relation to management changes and supplier-related discussions.
“… The Board has concluded that because it is unable to repay the loan it has no option but to concur with American Greetings proposal to place the Company and its subsidiaries into administration,” declared the 44-year old Essex-born retailer.
Restructuring
Clinton Card blamed weaker consumer confidence in the decline of sales for the past 26 weeks ending 29th January 2012, which gave impetus to a restructuring of the business under the leadership of Darwin Willson-Rymer, who became CEO last October 2011.
A credit facility for £55 million was secured by the company during the same month to fund the restructuring process. Ernst & Young was hired by Clinton Cards to assist the company in selling The Birthdays Group, which it acquired in 2004. The brand, that was managed separately, continued to make losses and posted £2.845 million operating loss for first six months ending on 29th January 2012.
Stores had also been reduced, down to 628 shops for the Clinton brand, after closing 17 of them and the same number of shops had been closed down for Birthdays, now numbering at 139.
Over 60% of the stores were negotiated to pay rents on a monthly basis and staff headcount was reduced by 15%.
A strategic review have been completed by the company, which examined customer experience, store portfolio, business efficiency, and digital offering, prompting the Board of Clinton Cards to say they recognize the need to restructure the business.
Clinton Cards said it was scheduled to publish its interim management statement on 10th May, which gave indication of a 3.5% drop in like-for-like sales.
Company Spotlight
Clinton Cards PLC was founded by the current Non-Executive Chairman, Don Lewin, OBE in 1968 and went public in 1988, growing through acquisitions over the years. The company sells personalised cards, greeting cards, gift items, and host parties.
As of 8th May, shares of Clinton Cards were priced at 7 pence a share, valuing the company at £13.91 million.
References
↑ History
↑ Clinton Cards in turnaround struggle
↑ Company Overview
