Conviviality, the company behind the off-licence chains Bargain Booze and Wine Rack, is to appoint administrators within a fortnight, putting 2,600 jobs at risk.
The impending administration has prompted warnings that beer pumps could run dry. More than 20,000 of Britain’s pubs are supplied by the company’s Matthew Clark division. The trade body, the British Beer and Pub Association, said many could now face short-term supply issues.
Conviviality said after discussions with its banks, the board had decided to appoint administrators within 10 business days, unless circumstances change. The secured creditors can also appoint administrators without filing notice.
The news came a day after the company said investors had refused its request for a fresh cash injection of £125m, needed to stave off bankruptcy after a string of profit warnings. The first warning was related to Conviviality’s failure to budget for a £30m tax bill. Its chief executive, Diana Hunter, has stepped down.
Directors are still looking for a buyer for all or part of the business, and it will continue to trade.
Matthew Clark Distributes wines and spirits to hotels, pubs and restaurants. Customers include 900 Wetherspoons and 200 Wadworth pubs, UK Hilton hotels, All Bar One, O’Neills and Slug & Lettuce. Based in Bristol, with 18 depots across the country
Bargain Booze 370 franchised retail outlets + 38 convenience stores
Bibendum Supplies wine, craft beers, cider and sake to the on-trade
Wine Rack 29 retail outlets
Catalyst Wine supplier
Walker & Wodehouse Wine merchant and royal warrant holder
Peppermint Operates bars at outdoor events such as Henley regatta, Isle of Wight festival and Bestival
Elastic Marketing agency specialising in drinks brands
The firm said in a stock market statement on Thursday: “The directors intend to allow the business to continue to trade and the company continues to work alongside advisers in order to preserve as much value as possible for all stakeholders as it explores a number of inbound enquiries regarding a potential sale of all or parts of the business.”
Conviviality supplies more than 700 off-licences and more than 23,000 pubs and restaurants including the JD Wetherspoon chain.
The firm’s shares remain suspended from the junior Aim market. Investors are likely to receive “little to nil” value for their shares, the company said.
PricewaterhouseCoopers accountancy firm is expected to manage the administration.
Conviviality has reportedly had trouble with suppliers and some customers have been looking for alternative sources.
An analyst at Langton Capital, Mark Brumby, said other operators such as Marston’s, the brewery and pubs operator, had distribution companies that supply the free trade. Matthew Clark’s assets are likely to find themselves with new owners.
“The speed with which Conviviality has apparently unravelled will unsettle investors, suppliers and customers,” Brumby added.
“One potential source of problems is the extremely low-margin nature of the majority of the businesses that Conviviality was involved in. This was a problem shared with Carillion. It is harder to survive shocks when margins are low. The antidote is perhaps to be incredibly well run.”
