Comet is set to meet with trade credit insurers next week as the electricals retailer tries to determine whether they will carry on offering cover to its suppliers once the business is sold to OpCapita next month.
Insurers of the struggling electrical retailer, which is being sold by Kesa Electricals to private equity firm OpCapita for £2, are revising the level of cover they will provide the business in the future, as the sale goes ahead against a difficult backdrop for the electricals market.
Credit insurers help protect suppliers in the event of a retailer defaulting on payment terms.
Two trade credit insurers told the Financial Times, they will assess how OpCapita’s financing of the acquisition may affect suppliers if the business enters into administration in future.
A £40m asset-backed loan will be key to this, as insurers work out how this affects retention of title terms, which give suppliers the right to reclaim any unsold stock in the event of an insolvency.
It is believed the £40m facility could be used as additional working capital during the run-up to peak trading before Christmas. This is in addition to £30m of funding from OpCapita and Kesa’s £50m dowry. Kesa and OpCapita are yet to name the source of the facility.
Kesa is due to post Comet’s Christmas trading performance figures tomorrow (Thursday).
Yesterday, electricals retailer Dixons posted a 7% plunge in like-for-likes in the 12 weeks to January 7. However, its as its gross margin edged up by 0.4 percentage points.