Owner of the Bargain Booze and Wine Rack chains, Conviviality Plc has to pay a surprise £30m tax bill, which is due for payment on 29 March 2018. This has not been accrued for within its short term cash flow projections. This has created a short term funding requirement. Trading on AIM has been temporarily suspended.
The company's announcement on 13 March 2018 confirmed an expected range of adjusted EBITDA of between £55.3m and £56.4m, rather than £70m. To the extent that the current situation creates operational difficulties, this may negatively impact this range.
The group continues to expect net debt to be approximately £150m for the period ending 29 April 2018, including the invoice discounting facility.
Conviviality has engaged PwC to assist it in its forthcoming discussions with HM Revenue & Customs and its key stakeholders, including its lending banks, credit insurers, suppliers and other creditors, as well as to determine the potential impact of any resulting funding requirement on the firm's adjusted EBITDA expectation and compliance with its banking covenants.
Following preliminary advice received from PwC, whilst there can be no guarantee, the Board believes this short term funding requirement will be satisfactorily resolved.
As well as owning Bargain Booze and Wine Rack, Conviviality is also the UK's biggest alcoholic drinks wholesaler after acquiring Matthew Clark in 2015 and and Bibendum in 2016.
