Independent grocery chain Booths is set to undergo a financial review after allegedly breaching its loan terms, which could force its owners to make additional payments into the business in order to retain control.
According to The Telegraph, senior lenders the Royal Bank of Scotland and HSBC have instructed accountants Grant Thornton to complete an Independent Bank Review of Booths.
This type of review often leads to owners of a company being forced to making a one-off payment to prevent the banks taking control of it.
However, a spokesperson from Booths responded to the allegations by “stressing” that the retailer as “not breached banking covenants”.
Executive chairman and chief executive Edwin Booth added that the turbulent times for retail as a whole made it ripe for “conjecture and speculation”.
Booths, nicknamed “the Waitrose of the north” and with 31 shops around the north west of England, recorded a loss of £6.3 million in 2016 compared to the prior year’s £1.1 million.
In addition, the 168-year-old retailer has not yet fully recovered from the damage caused by major floods in the north two years ago.
READ MORE: Booths‘ CEO Chris Dee leaves after 22 years
Management also attributed poor sales to the competitive market and the deflation brought on by the price wars.
Edwin Booth, a fifth generation family member, has taken on the dual role of chairman and chief executive as part of efforts to save the company.
He replaced Chris Dee, who suddenly resigned in May after 22 years with Booths.
In addition, a raft of senior management roles and team members were made redundant, which is expected to save the retailer £2.6 million a year after one-off costs of £1.6 million.
“Booths is a resilient 170 year family owned retailer with strong brand loyalty and leadership in place,” Booth said.
“These are turbulent times for the retail industry, which is rife with conjecture and speculation.
“We have an effective plan and team in place to ensure Booths remains a much loved retailer for our customers here in the north.
“We‘re focusing on delivering the best service, products and value to our customers.”
The extended Booth family, who all descend from founder Edwin Booth, own about 96 per cent of the company. The rest is owned by staff.
Click here to sign up to Retail Gazette‘s free daily email newsletter
