Postie Plus, the worst performing stock on the New Zealand stock market, has appointed administrators after its lenders withdrew support as the company continued to make ongoing losses.
The Auckland-based retailer appointed David Bridgman and Colin McCloy of PwC as administrators, saying attempts to recapitalise the business had been unsuccessful. The retailer's board also sought to sell the business outright, or find a new cornerstone shareholder. The administration should allow Postie Plus to keep trading so it can be sold as a going concern.
"Despite restructuring, optimising of the existing DC (distribution centre),and recent improvements to gross margin and market share, the company has continued to make ongoing trading losses," the company said in a statement. "The company's bank has been supportive through this period, but has decided it cannot extend its facilities further to cover ongoing losses."
In April, Postie Plus said it was in breach of its lending covenants and expected to remain so "for the foreseeable future," meaning its bank funding is repayable on demand, though the arrangements it had in place with its bank were sufficient to meet the company's forecast funding requirements up to July 30.
The company was hit by supply chain disruptions in the summer of 2012 and 2013 after outsourcing its distribution centre to a third party, while shifting its headquarters to Auckland, where it anticipated growth. After receiving legal advice, Postie Plus said it intends to "vigorously" pursue a damages claim.
The shares were halted on Thursday at 7.3 cents, valuing the company at $2.9 million. The shares have slumped 72 per cent since the start of 2012.
First Union, which represents retail workers, said it was saddened but not surprised by today's announcement.
"The last few years have been hard on the Postie Plus Group, and they have struggled to deal with serious supply chain issues," said union retail secretary Maxine Gay.
"We are pleased to hear that they have voluntarily relinquished administration of the business and we have been informed by the administrator that there are a number of credible and interested parties.
"Postie's administrator must ensure they put the interests of workers first. We hope that the business will be sold as a going concern rather than liquidation, to protect the jobs of Postie's workers."
- additional reporting APNZ