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Debt-laden national clothing retailer Postie Plus has been placed in administration by its board, in the face of mounting losses and having breached its banking covenants with the BNZ.
Aside from more than 600 jobs in jeopardy, there is an outstanding damages claim likely to made by the administrator, PricewaterhouseCoopers, which declined to reveal any details of the claim.
Postie Plus shares, the worst performing on the stock exchange last year, were placed on a trading halt on Thursday last week, and were suspended at 9am yesterday when the administration notice was issued.
While Postie's board said it had unsuccessfully sought a buyer in recent months, the board yesterday said administrators PricewaterhouseCoopers wanted to sell the ailing company as a going concern.
For its previous full-year to August 2013, Postie booked a $10.6 million loss, followed by a half year to February loss of $3.8 million, with expectations of another full-year loss from the current year, albeit less than last year's $10.6 million loss.
Craigs Investment Partners broker Peter McIntyre said given recent trading conditions for the retail sector in general, Postie's launch of a ''recovery plan'' in March, and mounting losses, its administration ''would not come as a total surprise'' to the market.
''The retail sector has been difficult for all participants during the past five years; most have adapted and Postie has tried,'' he said.
There was a balance to be struck by the retailers, in buying capacity, pricing, inventory management and establishing an online presence, he said.
''Postie's bank has been supportive, but obviously couldn't continue to do so anymore,'' Mr McIntyre said.
The board yesterday said the company had suffered a loss of market share and incurred trading losses, and in addition, there were ''further substantial consequential losses'' suffered; but the latter issue was not further explained.
''The company has commissioned expert legal advice as to its ability to recover compensation and has been advised that it has proper grounds to pursue a damages claim,'' the board said.
David Bridgman and Colin McCloy, of PricewaterhouseCoopers, were appointed as joint administrators yesterday.
When contacted, Mr McCloy said a creditors meeting was being sought for next Thursday in Auckland, and staff were encouraged to attend.
However,when pressed for details on from whom damages might be sought, and how much was owed, he declined to comment, having had only yesterday begun the administration process.
• First Union retail secretary Maxine Gay, hoped that for the sake of staff, Postie Plus would be sold as a going concern to protect the workers' jobs, rather than being liquidated.
''There are 82 Postie stores nationwide. Existing employees have been told that they will remain in their current roles and will continue to work agreed hours unless otherwise advised,'' Ms Gay said in a statement yesterday.
''We have been informed by the administrator that there are a number of credible and interested parties,'' she said.
She said she was ''not surprised'' by the voluntary administration announcement yesterday, noting Postie Plus had ''struggled to deal with serious supply chain issues''.
Postie has said in the past it had ''challenges'' in relocating its garment distribution centre from Christchurch to Auckland, and in February said it would cease using its distribution provider, effective from July 31.
Another provider was expected to begin on July 31.
The company said in February it had breached its banking covenants, and expected to remain in breach ''for the foreseeable future'', but had the BNZ's continued support, at the time.
While Postie Plus' debt had risen to $18.1 million at February, and liabilities outweighed assets by $5.6 million, it went on to sell a subsidiary for $9 million and reduce debt to $12.1 million.
At that time its bank still supported Postie Plus, but the board said yesterday its bank ''has decided it cannot extend its facilities further to cover ongoing losses''; prompting the administration.
In September 2003, Postie Plus' share price had the company valued at $50 million, but at 7.3c last Thursday, capitalisation was just $2.9 million.
Jan Cameron, the former co-owner of outdoor clothing and equipment retailer Kathmandu, which she sold in 2006 for a reported $275 million, had between 2007 and 2010 built up a 19.98% stake in Postie Plus.
The board said it had made ''considerable efforts to recapitalise the company'', attract a new major cornerstone shareholder, or to sell the company outright.
''The board has not been able to find a party to immediately inject a substantial amount of new capital. ''The board has therefore determined that the company cannot continue to carry on its business,'' a statement yesterday email@example.com
At a glance
• Initially a private family company, founded in 1909.
• More than 82 shops across New Zealand, employing 650 staff. Six Otago outlets.
• Listed at $1 per share, August 2003. Market capitalisation $40 million.
• Share price high of $1.25 in September 2003, with market capitalisation of $50 million.
• Share price low of 7.3c at Thursday trading halt, with market capitalisation of $2.9 million.
• Placed in voluntary administration by board, June 3, to be sold as going concern.