Conviviality, the troubled company behind Bargain Booze and Wine Rack, has launched an emergency £125m fundraising in an attempt to stave off its collapse.
In an update on its perilous position after the stock market closed yesterday Conviviality said it was preparing a placing and potential open offer and also issued its third profit warning this month.
Conviviality said a placing, being handled by Investec, its broker, was the “most appropriate mechanism to recapitalise the business” and warned that if it failed to raise funds through a placing or otherwise “it is unlikely to be able to trade on a going concern basis”.
The fundraising comes after the Aim-listed company revealed accounting errors, including the failure to provide for a £30m tax bill, which was due to be paid in less than a fortnight.
Last week, Conviviality appointed PWC to review its business and suspended trading in its shares. The shares had collapsed 66% since its first profit warning on 8 March.
It also axed its interim dividend and on Monday its chief executive, Diana Hunter, stepped down.
Conviviality said the placing would resolve overdue payments with its creditors; settle payments with HMRC; repay its £30 million revolving credit facility and provide “working capital headroom and fund costs associated with the work undertaken to recapitalise the business”.
