Blacks Leisure Group placed its Sandcity boardwear stores in administration after its bank Tuesday gave it a month to come up with a restructuring plan for its loss-making stores.
In a statement, the U.K. outdoor clothing retailer said Richard Fleming and David Costley-Wood of KPMG LLP had been appointed administrators of Sandcity Ltd., which operates 11 O'Neill stores. A review by Sandcity's directors concluded that the division isn't likely to return to profitability in the medium to long term.
The move means Blacks Leisure has exited around one third of its total Boardwear division that also includes the Freespirit chain.
Earlier in the week, Blacks Leisure said it expects to breach a financial covenant test at the end of September. The company has until Oct. 30 to present a restructuring plan acceptable to its bank, Lloyds Banking Group. Auditor KPMG was tapped to advise on the options available.
Lloyds, which on Aug. 10 agreed to extend Blacks Leisure's working capital facility to Aug. 2010, has agreed to a standstill on the covenant test to Nov. 30.
However, in its statement Tuesday, Blacks Leisure said: “If a waiver of the covenant breach is not ultimately given, the ongoing prospects of the group will be uncertain.”
