CARD RETAILER Clinton Cards, which has branches in Lewes, Seaford and Crowborough, is preparing itself to go into administration today.
In a statement Clinton Cards, also known as The Company, said it expected a subsidiary of American Greetings Corporation, The Company’s largest supplier, to take steps to place the company and its subsidiaries into administration later today.
It has therefore requested a suspension of dealings in its shares with immediate effect.
More than 8,000 staff are employed by the troubled retailer.
Clinton Cards was informed last night that Barclays Bank and Royal Bank of Scotland, had sold The Company’s loan facilities to American Greetings.
The outstanding indebtedness under these loan facilities is approximately £35m.
The Company is not in breach of any financial covenant or repayment obligation under the facilities.
However, it had been in receipt of temporary waivers for some technical breaches of default related to management changes and supplier related discussions.
Whilst not party to the negotiations between the Banks and American Greetings, based on its discussions with American Greetings, the board believed that, if the loan facilities were sold to American Greetings, American Greetings would enter into discussions with the Company with regard to its ongoing support for the business and expected it to extend the waiver of the technical breaches of the loan agreement.
However, having secured control of the debt, American Greetings immediately informed the Board that it intended to enforce the loan against The Company and the Board has concluded that because it is unable to repay the loan it has no option but to concur with American Greetings proposal to place The Company and its subsidiaries into administration.
Having completed the strategic review, the board recognised the need to restructure the business and had been expecting to review its business plans and strategy with its stakeholders, exploring ways to produce a better outcome for stakeholders as a whole.
The Company had been intending to publish its interim management statement on May 10.
Trading for the 14 weeks of the second half to date has continued to be difficult, with group like-for-like sales down by 3.5 per cent, in line with the trend reported in the interim report and the board’s expectations.