The Independent reports this morning that there are fears that the chances of Kesa Electricals selling Comet appear to be receding and today is the day for final bids to be tendered.
The paper reports that Opcapita, which is a private equity firm, and Hilco, a retail restructuring specialist, are still interested in acquiring the retailer but the pension liabilities of loss-making Comet remain a major stumbling block.
Comet has a pension deficit of £40.7m, but the pension trustees calculate this based on the strong finances of Kesa, the pan-European group that also owns the Darty chain in France, and Kesa’s ability to meet its funding obligations.
If Kesa sold Comet then the pension trustees and the pension regulator would require a much bigger commitment to protect the retailer’s scheme, as it would be deemed a riskier entity as a standalone company.
In the event of a sale going through, there is also a chance that Kesa would have to continue contributing to Comet’s pension fund.
Making this problem even larger is the fact that retail analysts forecast Comet could double its losses to £20m in its next financial year as there is a steep downturn for UK electricals. A new buyer would also have to provide considerable working capital to ease the concerns of suppliers.
While the pension deficit remains the main barrier, all these factors combined mean that Kesa may have to pay a dowry to a potential buyer of more than £150m.
As a result, Kesa may decide it is more prudent for its balance sheet to hang on to Comet and try to turn around its performance. However, Kesa are unlikely to make any decision on the future of Comet until it has examined the final bids.
None of the companies involved would offer comments.