Magners owner ready to repay Conviviality’s fatal £30m tax bill
C&C will also pay £102 million to three of Conviviality’s banks within the next 12 months.
Magners owner C&C is set to repay the £30 million tax bill that precipitated the downfall of Bargain Booze owner Conviviality after snapping up the failed company’s wholesale businesses.
The Irish cider giant said on Wednesday that it had agreed to a repayment schedule with HM Revenue & Customs (HMRC) to cover the sum, as it begins to draw a line under some of the financial troubles that brought Conviviality down.
C&C said it is also planning to pay £102 million to three of Conviviality’s banks – understood to be Barclays, HSBC and RBS – within the next 12 months.
The shock £30 million tax bill was revealed in a market statement in March, having not been accounted for in Conviviality’s short term forecasts.
Conviviality had issued a fresh profit warning just days earlier, having found a “material error” in its outlook.
It was also suffering from softer margins in January and February, while cash levels were becoming increasingly stretched.
Conviviality subsequently failed to pay HMRC by the original deadline of March 29.
Its wholesale arm – which included brands Matthew Clark, Bibendum, Catalyst, Peppermint, Elastic and Walker & Wodehouse – was snapped up by C&C with support from AB InBev for a nominal sum.
The retail arm, which included Bargain Booze, Wine Rack, WS Retail and Select Convenience, was bought by food wholesaler Bestway in a £7 million deal.
C&C detailed its repayment plan in its preliminary results, which explained it had also imposed cash controls on the acquired businesses.
The company has hired turnaround specialists AlixPartners to provide “detailed cash modelling” for the wholesale unit, and drafted in EY to conduct a full audit for the year to April 2018.
While the immediate focus is on stabilising the business, there are plans for a “simplification” and “optimisation” drive that will help streamline some activities – like billing systems – across the acquired businesses.
No jobs are expected to be lost as a result.
C&C chief executive Stephen Glancey said that there was “strong progress” with Matthew Clarke and Bibendum suppliers, and that it had moved swiftly to build a “strong, experienced and independent management team” to lead the units.
David Phillips, the former finance director at Matthew Clark, has been appointed as its managing director, while the former financial controller Alistair Harrison will take his place.
Former chief executive of premium wines and spirits distributor Bibendum Michael Sunders, meanwhile, has been reinstated as its boss.