4,000 jobs in the balance as struggling DIY retailer calls in Ernst & Young after defaulting on loan.
DIY giant B&Q is thought to be among those interested in snapping up stores, while Homebase is also likely to run its slide rule over the properties. Other retailers such as Asda have previously bought some Focus stores, while The Range has expressed interest in stores and stock.
Retail-Week.com revealed on Wednesday that Focus had filed an intention to appoint Ernst & Young as administrator following a credit default. 4,000 jobs are hanging in the balance.
Sources told Retail Week B&Q would be interested in acquiring between 20 to 30 stores. Ian Cheshire, group chief executive of B&Q parent Kingfisher, has openly told shareholders that should Focus ever collapse, B&Q would be interested in cherry-picking stores. B&Q said in March it wanted to expand its portfolio in the UK and Ireland by 20 stores in the next 5 to 10 years.
Focus said on Wednesday: “Following notification of an event of default under the senior credit facility, and a realisation that there were no alternatives that could be explored any further, Focus directors have come to the conclusion that to protect the interests of creditors they have no choice but to seek protection through filing a notice of intention to appoint administrators.
“The directors have sought consent from the business’s lenders to appoint Ernst & Young as the administrator. All stakeholders including staff are being informed.”
Focus’ owner Cerberus had entered exclusive talks with restructuring firm GA Europe about selling the business, but the talks collapsed, leading to the appointment of Ernst & Young. It is thought GA, along with other restructuring firms, will be interested in buying all or parts of the business out of administration.
“There were no alternatives that could be explored any further”
Focus had also been in discussions with its banks Lloyds and GMAC about its lending arrangements in recent weeks.
Its lenders agreed to a new facility in 2009 after the retailer undertook a CVA, led by chairman Bill Grimsey.
Retail Week revealed in November that Cerberus was considering its options for Focus, and that restructuring firms including GA Europe were eyeing the business.
The DIY retailer has been burdened by debt for years. It was sold for £1 to Cerberus in 2007 and Grimsey has been striving to turn around the business since then.
According to Retail Week Knowledge Bank, Focus made a pre-tax loss of £21m in the year to February 2010, on sales of £487m.
GA Europe declined to comment.