Whitcoulls administrator asks for time-out

The NZ operations of REDgroup have continued to function uninterrupted by the voluntary administration. Photo / Greg Bowker

Ferrier Hodgson, voluntary administrators for Whitcoulls' parent, REDgroup, yesterday sought High Court approval to extend the time available to consider its options.

Under the voluntary administration rules, a so-called "watershed" meeting, where creditors are advised of the state of play with the company, needs to be held five weeks after the appointment of a voluntary administrator, which would have made it March 24.

In Australia, the Federal Court extended the period within which the administrators must convene the meetings of creditors for the Australian companies to no later than September 18. A spokesman for Ferrier Hodgson said it would be up to the High Court as to how long the extension went in New Zealand.

The extension would allow the insolvency experts time to "frame the options" for the company's creditors as to what may be in their best interests, Steve Sherman, a Ferrier Hodgson partner and administrator for REDgroup, said.

"Ultimately the creditors will be asked to assess the options that we will have provided them with, and whether they consider them to be in their best interests," Sherman said.

Ferrier Hodgson started advertising Whitcoulls and other REDgroup businesses for sale over the weekend.

Sherman said the campaign was aimed at assessing the level of interest but that the administrators had an open mind as to the future of Whitcoulls. He said "encouraging expressions of interest" had been received.

Ferrier Hodgson would prefer a "whole-of-company" deal, but is willing to talk to parties who have an interest in one or more segments of the Whitcoulls-Borders group.

The New Zealand operations of the group have continued to function uninterrupted by the voluntary administration, which came into effect on February 17.

Ferrier Hodgson is upbeat about REDgroup's New Zealand businesses, compared with its Australian operation, where 38 book stores have closed. In New Zealand, REDgroup has 67 Whitcoulls stores, five Borders stores and nine Bennetts stores.

REDgroup's unsecured New Zealand creditors are owed $21.5 million while the group's Australian creditors are out of pocket by A$25.5 million ($34.5 million). The company's total secured debt was A$118 million ($160 million), most of it to its owner, private equity owners Pacific Equity Partners (PEP).

Central to the idea behind voluntary administration is that it provides for a moratorium or "stay" on debt proceedings against the company while the company continues to trade.

PEP bought Whitcoulls and Angus and Robertson from WH Smith in 2004. Later, it acquired 32 Borders stores in New Zealand, Australia, Singapore and consolidated them into REDgroup.

FOR SALE

* Whitcoulls (74 stores), Bennetts (nine stores), Borders (five stores).

* Market: books, greeting cards, magazines.

* Turnover: $200 million a year