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Alchemy's Floors-2-go Calls In The Administrators

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http://business.timesonline.co.uk/tol/busi...icle4378961.ece

Alchemy's Floors-2-Go calls in the administrators

The sliding housing market and a slump in do-it-yourself home improvements has forced Floors-2-Go, the wood and laminates flooring retailer, to collapse into administration with the loss of almost 100 jobs.

The administration, which has led to 41 of Floors-2-Go's 132 stores to shut, marks a setback for Alchemy Partners, the UK private equity group, which backed the £52.4 million acquisition of the company in December 2006.

John Moulton, Alchemy's founder, denied last month that the retailer was heading for the rocks.

He dismissed speculation that a restructuring firm was about to be called in and said he was comfortable with Floors-2-Go's debt position.

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It is understood that trading at the retailer has deteriorated sharply since February, with like-for-like sales sliding by more than 20 per cent in recent months.

Although Floors-2-Go had surplus cash facilities it is thought that it breached the terms of debt covenant agreements with its bankers at National Australia Bank.

Last night, the board at Floors-2-Go hired administrators at Kroll after a downturn in sales from a drop-off in households spending on home improvement.

Floors-2-Go is headquartered in Birmingham and employs a total of 450 retail and head office staff.

Fraser Gray, a partner at Kroll, said: "We understand that this is a difficult time for everyone involved. Retailers are battling a particularly hostile trading environment at present, and it is clear that the pain is being felt acutely in the home improvements sector."

He said Kroll remained hopeful the business could be sold as a going concern. It will continue to trade while the options are reviewed.

Kroll declined to comment further but said it would release further information if "significant developments" occur.

Floors-2-Go's website was operating normally today, offering sales prices and a "clearance blitz". All existing orders and deposits will be honoured, Kroll said.

The administration underscores the dire trading conditions on British high streets, where a number of other companies have found themselves in difficulties.

Last week, MFI, the furniture chain owned by Merchant Equity Partners (MEP), brought in Kroll Talbot Hughes (KTH), a restructuring expert that specialises in distressed businesses.

MFI, bought by MEP for just £1 in September 2006, said KTH was "helping with our financial reporting systems, operating issues and forecasting" but refused to comment on current trading.

MFI operates 200 stores in the UK and is thought to have £20 million in the bank after paying its £17 million quarterly rent bill in June.

Its move came just two weeks after ScS Upholstery, a sofa retailer that ran into difficulties with its credit insurers, changed hands for a negligible sum.

It was bought by Sun European Partners after being put temporarily into administration.

The first high-profile retail casualty of the credit crunch came in January, when Dolcis, the shoe retailer, called in administrators from KPMG.

Dolcis, founded by a market trader in 1863, closed 89 stores and concessions out of a total of 185. Almost 600 of the chain's 1,200 staff lost their jobs.

Alchemy declined to comment.

Floor gags?

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Oh, how I hate companies with "clever" numbers in their names. What's next? A bathroom fittings company called Defec8? A bed supplier called 4nic8? A piece of apparently innovative but ultimately just daft camping equipment called the Assi9 1der 10t?

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Oh, how I hate companies with "clever" numbers in their names. What's next? A bathroom fittings company called Defec8? A bed supplier called 4nic8? A piece of apparently innovative but ultimately just daft camping equipment called the Assi9 1der 10t?

I guess they could have called it something worse - like Floorz-2-Go.

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I guess they could have called it something worse - like Floorz-2-Go.

You're making my teeth itch.

4z-2-go

Get out of my head! Out! Oooouuuuttt!

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Not sure about the "clearance blitz" either!

When you've both bombed and tanked, I suppose it's the only option.

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Oh, how I hate companies with "clever" numbers in their names. What's next? A bathroom fittings company called Defec8? A bed supplier called 4nic8? A piece of apparently innovative but ultimately just daft camping equipment called the Assi9 1der 10t?
DEFEC8 great name i would patent that if i was you quality ! :lol::lol:

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So the first private equity failure since the credit crunch?

If so I'm a little disappointed as this company is small fry. I suppose there'll be bigger failures to come.

Any pension funds lost in this?

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When you've both bombed and tanked, I suppose it's the only option.

Carpet bombed?

Was Floors-2-go a business name or a prediction of future doom?

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BC partners [Foxtons] private equity, and probably KKR [lots of take overs] might be next.

There's going to be a few, problem is a lot of this was funded out of our ****ing pensions, as they promised greater returns. The only return they are going to give us is sweet FA.

The free market the answer to every con man's dream.

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So who has killed this business?

Moulton and his private equity debt-driven business model or would it have gone bust anyway?

If it is the private equity business model then that will be very bad news for many businesses that operated perfectly well before Moulton and his chums leveraged them into oblivion.

Eidt: fwiw I actually think Moulton knows what he is doing - which makes it ever more scary

Edited by Red Kharma

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So who has killed this business?

Moulton and his private equity debt-driven business model or would it have gone bust anyway?

If it is the private equity business model then that will be very bad news for many businesses that operated perfectly well before Moulton and his chums leveraged them into oblivion.

Eidt: fwiw I actually think Moulton knows what he is doing - which makes it ever more scary

Sounds like the Bank over-reacted. However if they thought they were staring into an abyss and could get at least some of their shirt back who can blame them.

There have been many PE busts before this one (most of them don't make the news) and there will be many more.

Alchemy were not particularly aggressive when it came to leverage...there are many businesses carrying a far heavier debt burden than the average Alchemy buy-out - it's probably just the case that the bank daren't take the hit, or can't because of "cov-lite" debt structures.

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