NAB has been tied up in the collapse of Queensland retailer WOW Sight and Sound after the bank’s private equity arm made a substantial investment in the company two years ago.
Receivers announced yesterday all fifteen WOW Sight and Sound stores would close with 580 people losing their jobs. The electronics retailer collapsed late last month, in part due to a $20 million property debt incurred during late 2010.
The 15 store closures add to the 500-plus closures already announced by major retailers over the past year, including Borders, Fletcher Jones and Colorado.
NAB’s private equity arm, NAB Integrated Capital Solutions, made a “substantial” investment in WOW Sight and Sound in January 2010. The investment, believed to be less than 50% of the business, delivered it a board seat and was designed to fund the company’s aggressive growth plans.
SmartCompany understands NAB retains a stake in the business although it declined to comment this morning. Receivers Ferrier Hodgson were also contacted this morning, but SmartCompany was referred to NAB.
At the time of the investment, WOW retail director Con Nicolas said NAB’s investment was “welcome” and confirmed the management team retained a majority stake.
“One of the reasons we partnered with NAB is what they bring to the table is a lot of expertise,” he said in early 2010.
“We had quite a few other options but the package that NAB presented to us suited our needs… particularly in terms of future growth.”
He added that WOW wanted to open 25 new stores within three years, bringing its total to 40, and was particularly seeking more “high-profile sites” as it moved to leasing rather than property development.
Less than a year later, the company ran into problems. Co-founders Sam Savvas and Suds Sotiris were caught up in a property debacle when receivers were appointed to assets controlled by the two men.
These assets included The Zone Australia and Aristocon, which owned the properties placed in receivership.
At the time, WOW Sight and Sound said the company was not affected. But last month, Ferrier Hodgson said the company was placed in receivership in part due to a $20 million debt associated with Aristocon.
Receiver James Stewart also said the company had been subject to declining sales and profitability. The store closures were announced after it became clear a sale would not be achieved.
WOW Sight and Sound was contacted for comment this morning, but phones at the head office and stores appeared to have been disconnected.