Clubs owner calls in administrator
The UK's biggest nightclub owner has collapsed into administration after banks pulled the plug, putting 3,000 jobs at risk.
Luminar, which runs Liquid, Oceana and Lava & Ignite clubs in town centres across the UK, was told by its lenders that they would not extend a recent period of leniency due to end on Thursday.
The group, which employs 3,000 full and part-time staff and operates 75 venues, has suffered amid the financial gloom as its core market of 18 to 24-year-olds has been hit by high levels of youth unemployment.
It is understood that administrator Ernst & Young will continue to run the business as a going concern while it seeks a buyer.
The business was hit as consumers' disposable income was squeezed, while the smoking ban and changes in licensing laws to allow pubs to stay open longer have also hurt it. The company struggled to keep up with repayments on its £90 million debt pile as sales slumped.
It recorded losses of £198 million in the year to the end of February as sales dropped by 19% to £137 million.
Its lenders - Barclays and taxpayer-backed Royal Bank of Scotland and Lloyds - threw it a lifeline in May when they agreed to waive banking covenants on a temporary basis to allow the business time to turn itself around. This period of leniency was extended in August but expired today.
The group had been trying to drum-up more business by diversifying its offer, including holding Jongleurs comedy nights and introducing WooWoo cocktail bars next to its clubs. It had also been running more student nights and live DJs and acts to refresh its appeal.
Trading in recent months had been more encouraging although its profit margins have been squeezed as it put on more promotions. However, the English riots in August added to its woes and had a "material impact on trading".
The Milton Keynes-based group recently put itself up for sale in an attempt to secure its future. But it only received offers for part of the business and said these were not sufficient to generate returns for shareholders. Ernst & Young said it is to apply to have Luminar's shares delisted. They were suspended on Wednesday.