Reuters reports that a small number of turnaround specialists have lodged offers for loss-making electricals chain Comet in a process likely to realise little, if any, cash for parent Kesa , say people familiar with the matter.
The field includes a joint offer from Gordon Brothers Europe and investment firm OpCapita and interest from restructuring specialist GA Europe, the people said. Restructuring firm Hilco UK is also reportedly interested in Comet.
Ex-Kingfisher executive Jim Weight is also now reportde as joining a group of turnaround specialists who were targeted as buyers for what is widely seen as a difficult asset in a declining market. Mr Weight heads turnaround business Weight Partners, which invests private money into struggling consumer and retail companies. During his spell with Kingfisher he spent time on the Comet board. Mr Weight, who this year bought TV company Boxclever, also worked at Hit Entertainment, maker of the Bob the Builder TV programme.
Trade players like Dixons and Best Buy , which has a joint venture with Carphone Warehouse , are staying on the sidelines, although they could be interested in picking up stores that might become available, the people said.
In 2008 OpCapita, under its previous name Merchant Equity Partners, was part of a consortium with Goldman Sachs and Colony Capital that purchased Kesa’s French electricals and furniture chain BUT for 550 million euros ($791 million).
A sale of Comet could presage a break-up of the chain.
If Kesa opts to dispose of Comet, it would be keen to sell to a party that continues to trade the chain.
It will not sell Comet to a party that will place it in administration, a source close to the group said.
Bidders are expected to be informed in the next seven days if they are through to the next round of the process which is being run by Bank of America Merrill Lynch.
None of the bidders have offered much for Comet and may be even demanding a reverse premium, or dowry, to take it off Kesa’s hands.
That may concern Knight Vinke, Kesa’s largest investor with a 19.3 percent stake, which has said it would only be in favour of disposing of Comet if an “acceptable price” can be realised. Comet was put up for sale by Kesa last month after the chain slumped to a loss of 8.9 million euros in the year to April 30. Chairman David Newlands described this result as “unsatisfactory and unacceptable”. He said the firm would consider a range of options for Comet, including its disposal or formation of a joint venture, while pressing ahead with a turnaround plan which includes selling weaker shops and focusing on profitable ranges like small appliances.
Losing Comet would enable Kesa to focus on its profitable French business Darty, switch its listing from London to Paris, and get re-rated, but it would also reduce the group’s buying scale, which could impact profit margins.
Kesa, Bank of America Merrill Lynch, Gordon Brothers, GA Europe, Knight Vinke, Dixons and Carphone declined to comment, while OpCapita was not immediately available for comment.