Focus to sell stores to raise funds
Published: 17 November, 2010
CREWE: The private equity owner of Focus is sounding out other retailers about acquiring some of the DIY chain's shops, as it seeks an injection of funds to roll out its new store format, reports the Independent newspaper today.
Cerberus, which bought Focus for a £1 in 2007, hired investment bankers at Lazard to review options for the UK's fourth-biggest DIY chain. Focus has invited expressions of interest in a number of its 180 shops, although this is just one of a number of options being considered.
The situation has come to a head because the management team of Focus believe that they need an additional £40m to turn around the business, which narrowly avoided collapse by implementing an insolvency procedure last year and made a loss of £11.7m for the year to 21 February 2010.
It is thought that Cerberus, which owns debt and equity in Focus amounting to £230m, wants to tie up the sale of some stores by the end of the month. Commentators doubt whether the stores will be of interest to many retailers given that only 15 have planning consent for food.
B&Q, Homebase and Wickes my well be interested, but a move by the market leader B&Q, which declined to comment yesterday, would attract the attention of the competition authorities if it made a play for a substantial number of the Focus stores.
Lloyds Banking Group, which provides Focus with some of its £50m working capital facility, appointed accountancy firm Ernst & Young to review the 180-store DIY retailer.