Cash shortfall prompted ScS pre-pack; Sun Capital invests £20m in sofa chain

28th July 2009 | upholstery | The withdrawal of credit insurance and failure to renegotiate a bank overdraft compounded the economic woes that forced upholstery retailer ScS to court investment firm Sun Capital Partners for funding last summer.

The sofa giant’s trading arm was bought for £1 in a pre-pack deal that saw its parent, ScS Upholstery plc, placed into administration. The firm’s first accounts since the change of ownership show the American investment firm has pumped £20m into ScS, which made an after tax loss of £7.2m in the year to 28th July 2008.

£15m was loaned to the firm following the pre-pack to satisfy working capital requirements, with a further £5m added in late September – described as being necessary to ‘further stabilise the business.’

The 95-store retailer had sales of just over £188m in the 13 months to 28th July. Sales in the prior ten months had been nearly £184m.

The firm’s losses include exceptional charges of £4.2m – which consists of provision for losses on the fixed asset value of stock and loss-making stores, the cancellation of a share incentive plan, and provision for onerous leases.

The management of the company remains largely as before, although Mike Browne resigned from the board in December.