Private equity-owned REDGroup Retail, which was once Australia’s largest bookstore owner, is urgently looking for a buyer, and will close shop if one is not found, Reuters reported. Administrators for the company began looking for a buyer after they were unable to reach a deal with creditors. REDGroup is owned by Pacific Equity Partners.
(Reuters) – Administrators for private equity-owned REDGroup Retail, once Australia’s largest bookstore owner with the Borders and Angus & Robertson chains, are urgently seeking offers for the group after they were unable to reach a deal with creditors.
Administrators Ferrier Hodgson said if no suitable buyer can be found, the Australian operations will be closed.
REDGroup, owned by Pacific Equity Partners, collapsed in February amid high levels of debt and a steep downturn in the retail sector.
The environment has been particularly harsh for some private equity owners that bought at the peak of the buyout boom in 2006 and 2007 and employed high levels of gearing.
Two retailers — REDGroup and Colorado, owned by Affinity Equity Partners — have been forced into the hands of administrators, while others have shelved IPO plans.
High and low-end retailers were caught unprepared by the persistent weakness of consumer spending in the past six months, despite a solid economy, robust income growth and a jobless rate hovering around 5 percent.
BOOKS HARD HIT
John Melluish (MELLUISH) from Ferrier Hodgson said in a statement he was now “urgently seeking offers” from potential buyers of all or part of the Angus & Robertson or Borders networks in Australia.
“If we are unable to find a suitable buyer, the Angus & Robertson and Borders stores will be closed,” he said.
Books have been particularly exposed to internet competition from Amazon and the like.
Books bought online from overseas often cost around half the Australian retail price because of restrictive importation laws designed to protect local publishers.
In addition, shopping mall landlords in Australia such as Westfield charge some of the highest retail rents in the world, so the book chain’s costs were higher than its overseas peers despite similar rates of sales per metre.
REDGroup’s creditors were mainly its landlords and book publishers, and administrators hope an agreement can still be reached.
Ferrier Hodgson last week sold seven Borders and 57 Whitcoulls New Zealand stores to the James Pascoe group, which owns Farmers, Goldmark and Prouds, for an undisclosed amount. The New Zealand business was still profitable. (Reporting by Victoria Thieberger; Editing by Ed Davies)