ChoicesUK eyes buyer as vid biz slows
EmptyLONDON -- In a further indication of the declining fortunes of home entertainment retailers in Britain, Alternative Investment Market-listed ChoicesUK, which owns the U.K.'s No. 2 rental chain, said Tuesday that it plans to go into administration.
"The directors have decided that it is in the best interests of the creditors to seek to appoint administrators as soon as possible," the firm said.
An administrator, understood to be PricewaterhouseCoopers, is set to be formally appointed Wednesday and is expected to look for a buyer for the business. Trade sources suggested that there are a number of companies interested in parts of the business.
The announcement follows a downbeat trading statement issued in April when CEO Anthony Skitt made it plain that, as a result of rampant piracy and price deflation in the sell-through sector, the future of stand-alone rental stores was in jeopardy.
"Clearly, stand-alone stores are becoming less viable," he said. "That's as plain as the nose on your face."
The company reported a pretax loss of £2.9 million in the six months ending Feb. 10, and was expected to report a full-year loss of £4.6 million.
Since April, Skitt has led a concerted effort to either raise new financing or sell the business as a going concern. Although a deal was thought to be in place last week, the company said it has been unable to work out a plan acceptable to all parties involved, most notably its bankers, Lloyds TSB, which is said to be owed about £13 million ($25.8 million).
In addition to its rental business, which includes 170 stores, ChoicesU.K. also owns a ChoicesU.K. Local, which supplies about 4,000 convenience stores with entertainment product, and Choices Direct, a mail order, Internet and third-party fulfillment operation.
Overall, the company employs more than 1,800 people, 400 of whom are based at its Peterborough headquarters.
The company is the latest in a line of home entertainment business failures in the U.K. In January, No. 3 retail chain Music Zone folded and was bought out of administration by rival Fopp, which in turn went into administration in June.
On the distributor side, budget DVD specialist Prism Leisure Corp. went bust in May and, this month, indie special interest programming distributors Green Umbrella and Medal Entertainment & Media both went into administration.
A recent run of bad weather, which buoyed the rental sector, had little affect on ChoicesUK, according to a spokesman, because it was unable to carry enough stock to take advantage of returning renters.
Shares in the company closed at 10 pence on Tuesday, valuing the company at £1.9 million ($3.8 million). After its flotation in 2001, ChoicesU.K. shares hit an all-time high of £2.64.