Belfast Telegraph

Banks ponder Arnotts stock market flotation

A future return to the stock market for Arnotts is one of the options that could be pursued as an exit strategy for Anglo Irish Bank and Ulster Bank, according to Mark Schwartz, the new chairman of the iconic Dublin department store.

The two banks, which are owed about €300m by Arnotts, gained formal control of the retailer this week after the European Commission gave the go-ahead for the move.

A flotation of the retail business would mark its second time on the stock market. Arnotts made its original debut as a listed stock back in 1875, just over a decade after it was founded. It was delisted in July 2003 after a takeover battle which was prompted by a move made by financier Peter O'Grady Walshe but was eventually won by a vehicle headed by Richard Nesbitt.

Mr Nesbitt was formally replaced as chairman this week by Mr Schwartz, a retail expert from the United States who was parachuted in by the banks and has been effectively running the operation for a number of months.

Mr Nesbitt, whose family has been involved with Arnotts for more than a century, is remaining as a non-executive director.

He amassed the €300m debt pile at the department store operator as he sought to create an extensive €750m shopping zone surrounding Arnotts.

Mr Schwartz has said that a stock market flotation, bringing on board new investors or a refinancing are all options that could be considered at a later stage.

He told industry magazine 'Drapers' in an interview to be published today Arnotts remains "very profitable, both from an earnings and cash point of view".

Without referring to a specific timeframe, he added that sales had increased by a high, single-digit percentage and that margins had improved.

Mr Schwartz said that the two banks wanted him to focus on running the core retail business in the short to medium-term and that Arnotts does not require any additional investment at present.

He added that a new working capital facility negotiated with Anglo and Royal Bank of Scotland-owned Ulster Bank would enable him to bring new brands to Arnotts and also to boost capital expenditure at the retailer.

Mr Schwartz, who is chief executive of Palladin Capital Group, is undertaking a review of senior executive management positions.

That is likely to focus on three key positions - group chief executive Brian Kearney, chief financial officer Declan Delanty and chief executive of Arnotts' retail operations, David Riddiford.

When the takeover battle for Arnotts commenced in 2002, the initial offer of €11.50 per share valued the firm at just over €204m.