In a statement earlier today, Clinton Cards announced that its largest supplier intended to place it into administration. This is due to Clinton Cards being unable to repay £35 million worth of loans to American Greetings.
American Greetings acquired the loan facilities for the UK company following a sale by both Barclays Bank and the Royal Bank of Scotland. Both of these banks had waived certain conditions of the loans obtained by Clinton Cards; however, American Greetings proved unwilling to extend these terms and informed the board immediately that “it intended to enforce the loan against the company.”
In a statement released by the board of directors of Clinton Cards earlier this morning, it said; “Whilst not party to negotiations between the Banks and American Greetings, based on its discussions with American Greetings, the Board believed that, if the loan facilities were sold to American Greetings, American Greetings would enter into discussions with the Company with regard to its ongoing support for the business and expected it to extend the waiver of the technical breaches of the loan agreement.
“However, having secured control of the debt, American Greetings immediately informed the Board that it intended to enforce the loan against the Company and the Board concluded that because it is unable to repay the loan it has no option but to concur with American Greetings’ proposal to place the Company and its subsidiaries into administration.”
Clintons Cards currently owns 767 commercial properties in the UK, of which 628 are Clintons stores. The remaining 139 stores operate under the Birthday Group, which the Clinton’s Chain bought out in November 2004. Over 8,000 people nationwide are employed by Clinton Cards.
Earlier this week, Clinton Cards were rumoured to be considering money-saving measures up to and including store closures following chief executive Darcy Willson-Rymer’s decision last October to conduct a review of the company’s entire operation. In the six months up to 29 January this year, it sustained a £3.6 million loss, and had acquired a net debt of £33.9 million by the end of July 2011.
Peter Saville, Simon Freakley and Anne O’Keefe, partners at Zolfo Cooper, a firm specialising in Corporate Advice and Restructuring, were appointed as the joint administrators in the past hour.
Peter Saville said; “Our first priority is to stabilise the business and assess its financial position. We will continue to trade the business whilst we undertake a full marketing exercise to find buyers for all or parts of the Group so the best possible outcome can be achieved for stakeholders.
““It is likely that a number of stores will need to be closed in order to make the business financially viable. However, Clinton Cards and Birthdays are very well-known brands on the high street and we believe that there is a strong underlying core business. We are therefore confident that it is an attractive proposition for a range of potential buyers and welcome expressions of interest from third parties.”
