Published on 6 - June - 2012
Troubled Atlantic Homecare enters ExaminershipAtlantic, a member of the DIY division of Grafton Group Plc, has filed a petition seeking the appointment of an examiner, meaning it is now under the protection of the High Court while the company restructures for survival.
The Irish Examinership process helps a company survive through the formulation of proposals by the Examiner of a compromise scheme of arrangement; in order to qualify, Atlantic must prove to the court there is reasonable prospect of its own survivial.
Atlantic, which was acquired by Grafton as part of the Heiton Group in 2005, has been severely impacted by the recession, particularly the decline in consumer spending and the housing sector. Bosses say the company's ability to reduce operating costs has been inhibited by "the retention of upward only rent reviews for existing leases."
The retailer accounts for 2.75% of Grafton Group, which also owns Woodie's DIY Ltd, and has traded at a loss since 2007. Turnover has fallen by 44% from €100m to €56m over that time and its current trading position continues at a loss. Its performance is in negative contrast to the group's DIY division as a whole, which has "traded successfully and profitably in a demanding retail environment throughout this period." According to the group, it was Atlantic's performance which had held the rest of the DIY division back (Grafton reported retail sales dropped by 4.7% to €219.7m last year).
The group added: "These losses are no longer sustainable and a restructuring of Atlantic via the Examinership is intended to bring these to an end while maximising the potential for the business to survive."
Subject to the views of the Examiner, the restructuring of Atlantic may involve closure of at least five stores and is subject to agreement being reached with landlords on adjusting rents to current open market levels. Woodie's DIY Ltd is prepared to continue supporting Atlantic throughout the Examinership and has also indicated that it would be prepared to invest in the company to facilitate a scheme of arrangement for the restructured business.
Atlantic has no bank debt and is not part of Grafton's financing arrangements, the group said this development "will have no impact on financing and trading arrangements in the group and its other subsidiary companies in Ireland, the UK and Beligium."
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