Jan Cameron could buy back the troubled Retail Adventures business this week for $72 million, a significant reduction from the $85 million she paid to resurrect the business from receivership in 2009.
The deal, as reported by The Australian Financial Review, comes several months after the business fell into administration. During the past few months, Cameron has been preparing a bid and even writing to suppliers to garner support.
Administrators Deloitte were contacted this morning, but said it could not comment on the situation. The Fairfax report claims Cameron has outbid another suitor by $30 million. It also says the business owes creditors $270 million, with unsecured creditors owed $165 million.
David Gordon, partner at Bentleys and retail expert, told SmartCompany this morning the $72 million price is “bizarre” – especially considering Cameron sold her stake for $247 million seven years ago – and notes there are still plenty of unknowns as to how much the business is actually worth.
“You would assume this is some sort of deed of company arrangement where she doesn’t have to throw in money straight away,” he says.
If the bid is approved by the administrators and ANZ, Cameron will once again regain control of the business. The company has been operating under a licensing structure while in administration.
This would be the second time Cameron has brought the company out of collapse. The previous effort in 2009 saw Cameron spend $85 million, which came after selling her stake for $247 million a few years earlier.
A sale would conclude one of the most tumultuous corporate collapses in recent history. Last month, it was revealed litigation funders IMF had spoken with Deloitte, although the administrator is still conducting investigations.
More recently, Cameron has experienced some more problems. The floodwaters in Queensland have shut six Retail Adventures stores, while bushfires also threatened her own home in Tasmania.
But while a sale would bring an end to this volatile administration, Gordon says there are other considerations – such as how the business can actually continue.
“The Chickenfeed brand which was making most of the money has been very badly damaged by not moving from Tasmania to Sydney, and they’re in competition with Shiploads,” he says.
Shiploads is a discount store based in Tasmania, which has been encroaching on Retail Adventures’ territory. For now, Gordon says, there are just “too many unknowns” to determine how viable Retail Adventures can be going forward.
The Fairfax report claims the business could become profitable in 2014 after a series of job cuts and store closures.
“There’s a whole lot of brand damage, and you also have Big W and Kmart having a battle together. Then you have the Reject Shop on the other end doing very well with smaller stores.”
“You have to ask yourself whether there’s really a market position for this type of business anymore. Maybe the only place they can head is to smaller stores in the country.”
“You really just have to think about where the company is going to sit.”