Wed, 27 Jan 2021 | BUSINESS SALE
High-street stationer Paperchase is set to be acquired by Permira Debt Managers in a pre-pack deal. The deal is expected to include up to 90 of Paperchase’s 125 UK stores. The stationary chain said in early January that COVID-19 restrictions had put “an unbearable strain on the business” and that it was close to appointing administrators.
Most of Paperchase’s stores were closed during the crucial November-December period in which the retailer generally makes 40 per cent of its annual sales. Many stores were said to still be trading profitably, but this wasn’t enough to offset losses.
The company, which had undergone a CVA in March 2019, had also been put under pressure in recent years by the increasing popularity of online card retailers Moonpig and Funky Pigeon, a trend that has only accelerated during lockdown.
One insider to the deal contrasted it to Boohoo’s acquisition of the Debenhams brand, in which all of the department store chain’s stores will close, saying that Permira Debt Managers see “a genuinely viable high street business which can emerge from the pandemic.”
However, a party reported to have held an early interest in acquiring Paperchase, questioned Permira Debt Managers’ long-term commitment to the retailer. Permira Debt Managers has provided funding to Paperchase since 2015. Pre-pack sales where the involved parties are connected are set to be subject to mandatory independent scrutiny from April 2021.
In its most recent financial report, for the year to February 2 2019, Paperchase reported gross profit of £14 million and a £3.4 million loss for the financial year on turnover of £125 million, which was down from £131 million in 2018.
The retailer’s fixed assets were valued at £14.4 million, while current assets were valued at £16.4 million and net assets amounted to £2.8 million.
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