Booths will undergo a financial review after nearly breaching its loan terms, which may result in its owners making a one-off payment to retain independence.
The upmarket grocer’s senior lenders, Royal Bank of Scotland and HSBC, have instructed its accountants Grant Thornton to kick off an Independent Bank Review (IBR) of the retailer.
According to The Telegraph, the IBR was ordered after the supermarket chain came close to breaching the terms of its loans.
The IBR could result in Booths’ owners, who are descendants of founder Edwin Booth and collectively own approximately 96% of the business, making a one-off cash injection to retain independence, or the banks eventually seizing control of the retailer.
The remainder of the business is owned by staff.
Industry sources told The Telegraph that the complex family-ownership structure of the retailer may exacerbate the challenges facing the business.
Chief executive Edwin 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.”
This is the latest in a string of difficulties faced by Booths, which posted a full-year loss of £6.5m in November and whose stores estate has still not recovered from the damage caused by flooding in parts of the North in 2015.
The grocer has reshuffled its senior team in recent months following the departure of chief executive Chris Dee, who was at the business for 22 years.
Chairman and fifth-generation family member Edwin Booth has taken on the remit of chief executive in the wake of Dee’s departure and the business has also hired a new finance director to bolster its board.
Booths struck a partnership with Hong Kong-listed retailer Dairy Farm in March to sell a selection of its best-selling products in East Asia.