Focus in a partial sale to raise funds

Focus faces a partial sale as its US private equity owner looks to raise the funds necessary to roll out a store upgrade programme.

Cerberus has brought in investment banking firm Lazard to assess the options for the DIY retailer, one option being the sale of some of the stores.

Focus is the fourth largest DIY retail chain in the UK with 180 stores. Cerberus purchased the retailer for £1 in 2007 from previous owners Apax Partners and Duke Street Capital. As part of the deal, secured in June 2007, Cerberus also acquired Focus’ debt amounting to £225 million.

In 2009, Focus just escaped failure by implementing a company voluntary arrangement. The move enabled it to cut lease ties on several of its empty stores, and negotiate a two-year extension on its £50 million overdraft. It reported losses of £11.7 million for the year to February 2010.

The management team at Focus say they require £40 million to turn the business around. Cerberus aims to sell some of the stores by the end of the month.

The potential interest in Focus’s stores has been called into question, however, by various sources. Its main rivals B&Q, Wickes and Homebase are allegedly keeping an eye on the sale developments, but any further involvement is as yet uncertain.

As only 15 of Focus’ stores have planning permission for food, large supermarket groups including Sainsbury’s, Asda and Tescos are thought unlikely to be interested.

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