Blacks day as outdoor chain falls into administration

It's not going to come as much of a surprise that Blacks will (briefly) go into administration. But who will turn it around?

by Emma Haslett
Last Updated: 06 Nov 2012
Is this the fairytale ending Blacks had been hoping for? The ailing outdoor retailer, which appealed last month for a ‘white knight’ investor to come and save it, has suspended its shares on the London Stock Exchange with immediate effect and announced that it’s going into administration. It’s not quite as final as all that, though. The business will be doing what’s called a ‘pre-pack’ – whereby all its debts are magicked away by a fairy godmother (aka three partners from KPMG), and a knight in shining armour rides in to buy its assets out of administration…

Pre-packs are usually frowned upon because, by wishing away its debts, Blacks will leave its creditors out of pocket. To punish it for that, any buyer will almost certainly require that it either closes – or dramatically shrinks the number of jobs at – its headquarters and the large warehouse it’s attached to in Northampton. It’ll probably mean bad news for some of those employed at its 98 Blacks shops, 208 Millets stores and Peter Storm and Eurohike brands, too. Then again, it wouldn’t be a fairytale without a wicked witch…

Surely, though, even a hero would think twice about buying a chain that reported a £16m loss in the first half of this financial year – on top of the £36m debt it had already accrued? Details of the buyer won’t be released until after the sale has been finalised, but apparently Dragons’ Den’s Peter Jones and JD Sports have both shown interest. Curiously, the other candidate is Sports Direct, which very publicly abandoned plans to rescue the chain last month. Then again, given that the 22.5% stake it owns will be automatically be wiped out once the company is put into administration, perhaps it’s rethinking its plans.

Still: despite the fact that it’ll be debt-free once it’s bought out of administration, any buyer will still have a hard task on their hands. After share prices dropped by 97% last year, the company admitted just before Christmas that shareholders will almost certainly lose all their investment in the company. Although to be fair, shares had gone up by ½p since then, to 1 ¼p. Slowly does it… 

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