Clinton Cards goes into administration
- 9 May 2012
- From the section Business
Troubled retailer Clinton Cards has been placed in administration, after its largest supplier took steps to begin the process earlier on Wednesday.
Clinton had already asked for trading in its shares to be suspended before the administration announcement.
It said two of its banks sold £35m of loans to supplier American Greetings.
While the banks had waived certain conditions for the loans, American Greetings had pressed for repayments that Clinton Cards could not meet.
Founded in 1968, it is the UK's biggest card retailer, operating 628 Clinton shops and 139 Birthdays stores and employing more than 8,000 staff.
In March, Clinton reported a loss of £3.7m for the six months to the end of January and said the outlook for 2012 was worse than previously thought.
On Wednesday, it said like-for-like sales, which strip out the impact of sales from shops opened or closed in the past year, fell 3.5% in the past 14 weeks compared with a year earlier.
The company said Barclays Bank and Royal Bank of Scotland had sold its loan facilities to American Greetings.
It said that although it had not breached any covenants or repayment obligations, it had been given certain temporary waivers for "technical breaches" by the banks.
Clinton said it had originally believed that American Greetings would extend these waivers.
"However, having secured control of the debt, American Greetings immediately informed the board that it intended to enforce the loan against the company," the retailer said in a statement earlier on Wednesday.
"The board has concluded that because it is unable to repay the loan, it has no option but to concur with American Greetings' proposal to place the company and its subsidiaries into administration."
Clinton has been restructuring its business to try and turn around its fortunes, including closing a number of Clinton and Birthdays-branded UK stores.