Bargain Booze owner Conviviality has kicked off a £125m fundraising round to “recapitalise” the business and warned that without additional investment it could collapse.
The drinks retailer and wholesaler, which met with lenders and stakeholders last week in a bid to address its funding crisis, has launched a placing of its shares in a bid to raise extra capital.
The business said that the £125m it aimed to raise through its share placing would be used to settle overdue payments to creditors and HM Revenue and Customs, as well as pay off its £30m revolving credit facility and “provide working capital headroom”.
Conviviality said that if it “is unable to raise funds by way of the placing or otherwise, it is unlikely to be able to trade on a going concern basis”.
The Bargain Booze and Wine Rack parent company said it expected its full-year adjusted EBITDA to be approximately £46m, down from an estimate of £56m earlier in the month.
The firm’s chief executive Diane Hunter stepped down with immediate effect earlier this week in the wake of its accounting error.
Conviviality uncovered a forecasting error earlier this month and has since discovered a £30m payment due to HMRC by the end of the month.