Redgroup flags breach of covenants

Redgroup, book retailer, likely to be in breach of banking covenants

July 29 (BusinessDesk) – Redgroup Retail, the owner of the Whitcoulls and Borders book stores, is likely to be in breach of banking covenants at the end of August after difficult trading in Australia.

The Pacific Equity Partners-owned book, stationery and entertainment company, based in Melbourne, has begun talks with its financiers to seek a temporary waiver of covenants and said it will update the market “as and when appropriate.”

“Like many retailers, the company has experienced a tough trading environment, particularly in Australia, in the last quarter,” the company said in a media statement to the NZX, released via a PR company.

Its board expects an EBIDTA result of about $25 million for the 12 months ending August 28, against which interest payments of approximately $9 million will need to be made. The company is likely to be in breach of two out of three of its banking covenants as a result, it said.

PEP acquired the A&R Whitcoulls group from Britain’s WH Smith in 2004, and Red Group Retail now forms one of 13 investments it has in mostly Australia and New Zealand.

(BusinessDesk)

© Scoop Media