International retail group Kesa Electricals has confirmed this morning that it has agreed the disposal of the Comet business for the nominal fee of just £2.
Private investment firm OpCapita is to take control of the struggling retailer but has only promised to keep running it as a going concern for at least 18 months, and is likely to seek another buyer after conducting a restructuring of the business.
As part of the deal Kesa has agreed to invest £50 million in Holdco, shareholders of OpCapita, which should allow Comet to continue operations in current tough trading conditions and will entitle Kesa to participate in the equity proceeds of any subsequent sale of the retailer.
Comet revenues fell by 18.6 per cent on a like-for-like (LFL) basis in the six months to October 31st 2011 despite a store relay programme and the consolidation of the trader’s logistics and service centre operations.
David Newlands, Chairman of Kesa , commented: “In June 2011, the board decided to explore strategic alternatives for Comet in parallel with implementing the turnaround plan focused on restoring profitability at Comet over the medium term.
“Having concluded the review of its strategic alternatives, the board believes that a disposal on the terms agreed with the purchasers is in the best interests of ordinary shareholders and delivers a more certain outcome than continuing with the turnaround plan.”
An extraordinary general meeting will now be arranged as soon as is possible for ordinary shareholders to vote on the deal, and Kesa hopes to have the disposals completed by February 3rd 2012.
Kesa will retain the defined benefit pension scheme of Comet, which it says is substantially guaranteed following the sale despite it having a net deficit of €45.9 million (£39.3 million) as of April 30th.
Total first-half revenues dropped 7.9 per cent LFL for Kesa, which also runs the Darty chain in France, having been significantly dragged down by Comet’s performance.
Sales in the second quarter actually improved for the UK-based electricals specialist but the turnaround scheme was not progressing fast enough for Kesa to keep control of the business for any longer.
Newlands added: “Whilst good progress has been made against the turnaround plan’s strategic objectives, in reaching its view the board took into account: the ongoing negative impact of Comet on the financial position of the group; the significant challenge involved in achieving an acceptable level of profitability at Comet over the long term given the specific competitive nature of the UK market; and the substantial costs involved if the turnaround plan proved to be unsuccessful.”
In a good week for UK electricals sector leaders Dixons Retail, US-based rival Best Buy yesterday confirmed the imminent closure of all of its standalone stores in this country.