Harvey Norman buys rival's stores

HOUSEHOLD goods retailer Harvey Norman has bought most of the stores of its collapsed rival Clive Peeters for $55 million.

By InvestSMART · 3 Jul 2010

By InvestSMART ·
3 Jul 2010

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HOUSEHOLD goods retailer Harvey Norman has bought most of the stores of its collapsed rival Clive Peeters for $55 million.

Phil Carter, receiver and manager for Clive Peeters, said yesterday final details were being worked out, with the number and location of the stores to be announced by the middle of next week.

"We are very pleased to deliver a timely outcome with the sale of the majority of stores to a successful and well established retailer," said Mr Carter, a partner of insolvency specialist PPB.

"We will be working closely with Harvey Norman in the next few days to finalise arrangements, and we will be able to provide further details upon completion of the sale next week."

In a separate announcement to the stock exchange, Harvey Norman said it had agreed to purchase Clive Peeters's stock as well as intellectual property rights and other assets.

While neither party revealed how many stores were involved, it is believed to be at least 30, with the final number dependent on trading figures.

The Clive Peeters chain has 38 stores after the receiver closed six last month.

Also, no mention was made whether the Clive Peeters brand would be retained by the new owner.

The group collapsed in May when the board appointed administrators after failing to finalise an injection of new cash into the company.

National Australia Bank, which was owed about $40 million, then appointed Mr Carter to look after its interests.

The group had struggled since mid-2009 after it discovered a senior finance executive had embezzled $20 million. Much of the money was recovered but the damage to Clive Peeters' cash flow and reputation proved harder to fix.

It is understood that NAB has subsequently claimed that Clive Peeters owes it $44 million, which means that if the Harvey Norman sale is the only one completed, there will be a surplus of close to $10 million for other creditors.

Many of the trade creditors are believed to be gradually receiving either cash for their stock in the hands of Clive Peeters at the time of its collapse, or have negotiated "retention of title" releases.

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Frequently Asked Questions about this Article…

What did Harvey Norman buy from Clive Peeters and how much did it pay?

Harvey Norman agreed to buy the majority of Clive Peeters’ assets for $55 million. The company told the stock exchange it purchased Clive Peeters’ stock, intellectual property rights and other assets as part of the deal.

How many Clive Peeters stores did Harvey Norman acquire?

Neither party disclosed an exact number, but it’s believed Harvey Norman bought at least 30 stores. Clive Peeters had 38 stores after six were closed by the receiver, and the final number will depend on trading figures.

Will the Clive Peeters brand be kept by Harvey Norman?

The article does not say. No mention was made whether Harvey Norman will retain the Clive Peeters brand, so that detail remains undecided and unannounced.

Why did Clive Peeters collapse and go into receivership?

Clive Peeters collapsed in May after the board appointed administrators when it failed to finalise a new cash injection. The group had also struggled since mid‑2009 after a senior finance executive embezzled $20 million, which damaged the company’s cash flow and reputation.

What does the Harvey Norman sale mean for creditors like National Australia Bank (NAB)?

NAB had been owed about $40 million and later claimed Clive Peeters owed it $44 million. If the Harvey Norman sale is the only completed sale, the proceeds would leave a surplus of close to $10 million for other creditors. Many trade creditors are already receiving cash for stock or arranging retention‑of‑title releases.

Who is managing the Clive Peeters receivership and what did they say about the sale?

Phil Carter, the receiver and manager for Clive Peeters and a partner at insolvency specialist PPB, said final details were being worked out. He said the number and location of stores would be announced by the middle of next week and that they would work closely with Harvey Norman to finalise arrangements.

When will investors and the market learn more details about the store list and sale completion?

According to the receiver, further details including the number and locations of stores were expected to be announced by the middle of next week, with additional information provided upon completion of the sale next week.

How are trade creditors being treated during the Clive Peeters collapse and sale?

Many trade creditors are gradually receiving either cash for stock that was in Clive Peeters’ possession at the time of collapse or have negotiated releases under retention‑of‑title arrangements. The sale proceeds may also generate a surplus that could benefit other creditors.