Dick Smith goes into receivership

The retailer will continue to trade as receivers look for a buyer

A syndicate of lenders in retailer, Dick Smith (ASX:DSH), have made the decision to appoint receivers to the business.

James Stuart, Ryan Eagle and Jim Sarantinos from Ferrier Hodgson were appointed as receivers on January 5.

This follows the appointment of Joseph Hayes, Jason Preston, William Harris and Matthew Caddy of McGrath Nicol as voluntary administrators on January 4.

The retailer will continue to trade while the receivers undertake an assessment of the business and look for potential buyers.

Receiver, James Stuart, said it was too early to clearly identify the primary causes of the company's current financial position and the reasons for its decline, other than saying the business has become cash constrained in recent times.

Heading into the Christmas trading period, the retailer sounded a warning following a $60 million inventory write-down and conducted a 70 per cent off sale to help clear some of its excess stock.

"We are immediately calling for expressions of interest for a sale of the business as a going concern," Stewart said.

The retailer has about 3300 employees, which will continue to be paid by the receivers and Australian employee entitlements will be covered under the Fair Entitlements Guarantee (FEG) scheme if a buyer can't be found for the business.

Stewart said the New Zealand arm was profitable and expects it will be attractive to potential buyers.

Customers with outstanding Dick Smith gift vouchers won't be honoured and deposits won't be refunded.

On January 4, Dick Smith revealed it wasn't successful in obtaining support from its banking syndicate to see it through the next four to six weeks and was left with no option other than to appoint a voluntary administrator.

In a statement to the ASX, the retailer said sales and cash generation during December were below expectations and it explored alternate funding, but it wouldn't have been sufficiently timely to support its short-term funding requirements and allow it to order required inventory during the next four to six weeks.

Dick Smith runs 393 stores across A/NZ under four brands including Dick Smith, Electronics powered by Dick Smith, Move and Move by Dick Smith.

The retailer was born in 1968 as a car radio installation business based in Sydney. In 1983, Woolworths, which owned 60 per cent of Dick Smith, moved to acquire the remaining 40 per cent stake before selling the business to Anchorage Capital in 2012 for $20 million.

The retailer publicly listed on the ASX in 2013, offering shares at $2.20 each. At the time of publication, shares were trading at $0.35.



Read more: Adelaide's Intec Group goes into voluntary administration



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