One of the Co-operative Group’s largest lenders, Royal Bank of Scotland, has parachuted in its top troubleshooter to help the struggling group restructure.
Bob Hedger is a specialist in business turnarounds at the bank and has been tasked with helping restructure the Co-op after it reported a £2.5bn full-year loss, according to the Telegraph.
RBS is one of six lenders to the Co-op, which has seen its debt pile more than double in the past four years after a series of acquisitions, including the disastrous takeover of the Somerfield supermarket chain.
Among the issues is whether the Co-op should take part in its banking arm’s effort to raise £400m, which it launched last month. The Co-op would need to borrow much of the £120m it will need to keep its 30% stake in the bank after it last year ceded control of the lender to its bondholders after an emergency £1.5bn recapitalisation of the business. This came after a £1.5bn black hole was found in the Co-op Bank.
The Co-op is undergoing a governance review led by Lord Myners. However, top Co-op members have criticised some of Myners proposals to reform the business, including changing the structure into a two-tier company similar to a plc firm. Myners’ full review will be presented to members next month.
Hedger is understood to be supportive of Myners’ plans.
Last week the Co-op revealed it wants to quit 60% of Somerfield stores to focus on convenience and rebuild its reputation. The group also plans to sell its pharmacy chain and its farms.
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Co-op Group bolstered as RBS troubleshooter appointed to help with restructure