Conviviality shares suspended after identification of ‘short-term funding requirement’

14 March, 2018

Trading in Conviviality shares was suspended this morning after it identified a need for short-term funding to pay a VAT bill due on March 29.

The move follows a profit warning issued last week by the Bargain Booze owner, and outlined in more detail yesterday, which the company said was the result of an “arithmetic error” in its forecasting and soft margins in its Conviviality Direct division – which includes Matthew Clark and Bibendum – during January and February.

It said this morning that the latest blow could further impact its expected earnings for the current financial year, which have already been revised down by 20%. Its financial year ends on April 29.

In a statement to the financial markets this morning, Conviviality said: “The company yesterday identified a payment due to HM Revenue & Customs of approximately £30 million which falls due for payment on March 29 and which has not been accrued for within its short-term cashflow projections. This has created a short-term funding requirement.

“The company's announcement on March 13 confirmed an expected range of adjusted EBITDA of between £55.3 million and £56.4 million.

“To the extent that the current situation creates operational difficulties, this may negatively impact the adjusted EBITDA range.”

It added: “The company has engaged PwC to assist it in its forthcoming discussions with HM Revenue & Customs and its key stakeholders including its lending banks, credit insurers, suppliers and other creditors, as well as to determine the potential impact of any resulting funding requirement on the company's adjusted EBITDA expectation and compliance with its banking covenants.

“Following preliminary advice received from PwC, whilst there can be no guarantee, the board believes this short-term funding requirement will be satisfactorily resolved.

“Whilst the board considers the anticipated impact of the above on the company’s funding position, the company has applied for suspension of trading in the company’s ordinary shares on AIM with effect from 7.40am today.”




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