Children's clothing retailer Pumpkin Patch has been tipped into receivership by its lenders and appointed voluntary administrators after failing to reinvent itself in the face of shrinking sales and too much debt.
Auckland-based Pumpkin Patch's board appointed McGrathNicol's Andrew Grenfell and Conor McElhinney as administrators and said it understood KordaMentha's Neale Jackson and Brendon Gibson had been named receivers. Last week the retailer said there was virtually no value left in its equity after talks with its lender ANZ Bank New Zealand fell through.
"Despite considerable efforts by the board and its management team, it has become evident that no solution is available to the company, at this time, to address the current over-leveraged and significantly capital constrained position," chairman Peter Schuyt and managing director Luke Bunt said in a statement. "With no likely solution available, the board believes that the constraints currently experienced by the business are too great and the only appropriate action to best protect the interests of stakeholders is to appoint administrators."
In its full-year results published last month, Pumpkin Patch told investors its directors had given an undertaking to the bank that it would put forward proposals by Oct. 20, which was later pushed out to Oct. 31. The capital constraints were highlighted in the accounts as a "material risk" to the ongoing viability of the business.
Pumpkin Patch's debt to ANZ Bank rose to $46 million from $39.1 million in the year to the end of July 2016. It posted a loss of $15.5 million in the same period.
The retailer's board today said it was committed to working with the administrators and receivers to get "the best possible outcome for the company and staff".
The shares have been in a trading halt since Oct. 21, and last traded at 6 cents, valuing the retailer at $10.1 million.