The embattled owner of off-licence chains Bargain Booze and Wine Rack was on the brink of collapse last night, putting at risk more than 2,600 jobs.
In a statement to the stock market, Conviviality revealed it had failed to secure £125m in emergency funding to save it, following a dramatic fall from grace just three weeks ago.
Suppliers are said to have deserted the business, which supplies a host of major pubs and restaurants, after it failed to come up with the money to pay an unexpected £30m tax bill due to HMRC today.
Out of a job: Chief executive Diana Hunter left after more than five years at the helm
It had planned to use the cash to give the business some headroom as it reassessed its finances. Conviviality said it is now in talks with its lenders and is looking at selling either all or parts of the business.
But it admitted that should it be sold, shareholders are expected to lose everything.
The drinks retailer was plunged into financial chaos this month when it made an incorrect calculation in its financial forecasts and subsequently issued two profit warnings.
After its first profit warning on March 8 its share price plunged 66 per cent, wiping more than £300m off its value. It was forced to suspend trading of its shares and cancel its dividend.
Chief executive Diana Hunter left after more than five years at the helm.
It proved a marked contrast to Conviviality’s performance last year, when its share price surged as much as 51 per cent between the end of 2016 and October 2017.
Conviviality is understood to have accountants PwC waiting in the sidelines should it be forced into administration. The wholesaler has more than 700 convenience stores across the UK, which employ 2,600 staff.
A Conviviality spokesman said: ‘Despite a significant number of meetings with potential investors, resulting in good levels of demand, and constructive discussions with a number of key customers and suppliers regarding the provision of support, there was ultimately insufficient demand to raise the full £125m.
‘The board wish to thank its customers, suppliers and employees for their continued support during this difficult period for the company.’
Conviviality supplies 23,000 pubs and restaurants, with customers including JD Wetherspoon and Slug And Lettuce owner Stonegate Pub Company, with which it renewed long-term contracts earlier this year. In January it did a ten-year deal with pub owner Wadworth to supply wines to 200 managed sites and 139 independent outlets.
A spokesman for Wetherspoon said it had no plans at the moment to ditch Conviviality.
‘We’re one of, if not their biggest, customers. We have a contingency plan in place but so far there have been no issues with deliveries,’ he said. ‘They’ve been our supplier for 20 years and we’re not going anywhere else for the time being.’
Conviviality’s collapse would add more doom and gloom to the UK High Street, which has lost a number of big names, including Toys R Us and Maplin, leaving more than 5,000 jobs hanging in the balance.
Restaurants have faced a similar upheaval. Pizza and pasta chain Prezzo is closing 94 restaurants –around a third of its sites – celebrity chef Jamie Oliver’s Jamie’s Italian has shut 12 of 37 restaurants, while burger chain Byron is preparing to close 20 sites.
Conviviality said it will update the market in due course.