News: Post COVID drop in sales sent Rotherham bike retailer on path to administration
Following a relative boom period during COVID as people rushed to buy bikes, a slump in sales led to cashflow problems at Rotherham-based retailer, Planet X.
Rothbiz reported in June that Planet X Limited was sold in a pre-pack deal to Winlong Garments Limited, a company funded by Baaj Capital LLP. The move saw all 33 employees transfer to the purchaser as part of the sale.
Founded in Sheffield and now based in Aldwarke, Rotherham, the business has been designing and building road, gravel and mountain bikes for over 30 years, under brands including Planet X, Holdsworth, On-One and Titus. In addition, the company sells a range of clothing and accessories via its online store. In 2020, Planet X’s employees acquired the business from its founders and set up an Employee Owned Trust (EOT).
Administrators, Interpath Advisory, have now had their proposals accepted by creditors.
One of the largest creditors was Santander who funded the company through a term loan and a trade loan and their total indebtedness was £6.26m. Administrators anticipate that the bank will receive a partial dividend.
However, the administrators add that it is highly unlikely that there will be a dividend to preferential creditors and unsecured creditors. Documents showed £1.8m owed to unsecured trade and non-preferential creditors.
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The report explains: "The company performed strongly throughout COVID-19, growing its revenue to £19.1m and achieving a gross profit margin of 28% during FY21. Customer demand in FY22 and FY23 reduced, following the end of COVID-19 national lockdowns and reduced consumer confidence generally.
"In August 2022, the business experienced cash flow pressure and Interpath conducted an independent business review, following an introduction from Santander.
"The company continued to make losses and, despite ongoing discussions, had been unable to secure additional finance. Accordingly, Interpath was engaged on 20 April 2023 to undertake an Early Options process with the aim of exploring a potential sale of the business or to obtain external investment.
"Following an extensive marketing process over seven weeks, which generated significant interest from financial and trade investors, the company received three offers, all on an insolvent pre-pack basis."
Documents show that there were 20 expressions of interest and then two offers came from financial investors (on a business and assets basis) and one came from a "trade" investor (on a break-up basis).
A sale of the business and assets to one of the financial investors, Winlong Garmets Ltd, for a total consideration of £535,000 was considered to represent the best outcome for creditors.
Planet X's stock alone had a Net Book Value of over £3m.
Planet X website
Images: Planet X
Rothbiz reported in June that Planet X Limited was sold in a pre-pack deal to Winlong Garments Limited, a company funded by Baaj Capital LLP. The move saw all 33 employees transfer to the purchaser as part of the sale.
Founded in Sheffield and now based in Aldwarke, Rotherham, the business has been designing and building road, gravel and mountain bikes for over 30 years, under brands including Planet X, Holdsworth, On-One and Titus. In addition, the company sells a range of clothing and accessories via its online store. In 2020, Planet X’s employees acquired the business from its founders and set up an Employee Owned Trust (EOT).
Administrators, Interpath Advisory, have now had their proposals accepted by creditors.
One of the largest creditors was Santander who funded the company through a term loan and a trade loan and their total indebtedness was £6.26m. Administrators anticipate that the bank will receive a partial dividend.
However, the administrators add that it is highly unlikely that there will be a dividend to preferential creditors and unsecured creditors. Documents showed £1.8m owed to unsecured trade and non-preferential creditors.
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The report explains: "The company performed strongly throughout COVID-19, growing its revenue to £19.1m and achieving a gross profit margin of 28% during FY21. Customer demand in FY22 and FY23 reduced, following the end of COVID-19 national lockdowns and reduced consumer confidence generally.
"In August 2022, the business experienced cash flow pressure and Interpath conducted an independent business review, following an introduction from Santander.
"The company continued to make losses and, despite ongoing discussions, had been unable to secure additional finance. Accordingly, Interpath was engaged on 20 April 2023 to undertake an Early Options process with the aim of exploring a potential sale of the business or to obtain external investment.
"Following an extensive marketing process over seven weeks, which generated significant interest from financial and trade investors, the company received three offers, all on an insolvent pre-pack basis."
Documents show that there were 20 expressions of interest and then two offers came from financial investors (on a business and assets basis) and one came from a "trade" investor (on a break-up basis).
A sale of the business and assets to one of the financial investors, Winlong Garmets Ltd, for a total consideration of £535,000 was considered to represent the best outcome for creditors.
Planet X's stock alone had a Net Book Value of over £3m.
Planet X website
Images: Planet X
7 comments:
Sounds like a familiar story of a company saddled with debt after being pumped with investment and then experiencing a downward cycle and seeing the wheels come off in a chain reaction. Let's hope the company can mount a revival and get back on the road to recovery.
My apologies, I have been asked to take a brake from pedalling messages like this as the administrator is tyred of them. Well, that's punctured my balloon!
Knowing someone who worked for them who was a keen cyclist, it wasn't a suprise to him seeing as the people who owned it had little interest in bikes.
They seemed very clueless
The people who own Man United have little interest in football but that's not stopped them making a fortune.
And the relevance is because they didn't make a success of this.
Sorry Rothguy, but I don't understand your point?
The workers have arranged a meeting with management and have appointed a spokesperson.
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