Veritas Investments has sold its food market business Nosh Group for $3.98 million, meeting lender ANZ's revised deadline to sell or close the money-losing chain.
The NZX-listed company, which also includes the troubled Mad Butcher chain and and eight bars in Auckland and Hamilton in its stable, announced this afternoon it has entered an unconditional agreement with Gosh Holding to sell the business and assets of Nosh as a going concern. Companies Office records show the newly-formed Gosh (it was registered at 11.23am today) is 100% owned by the Sydney-based Andrew Guy Phillips.
The purchaser has agreed to assume Nosh’s trade creditor liabilities under this transaction.
The sale price included about $1.055 million of stock, with payment due on February 10.
Veritas says the sale proceeds after adjustments will be used to repay the group’s bank debt to ANZ.
The company took on a $5 million funding line with ANZ to buy the Nosh stores in 2014 but struggled to turn the gourmet supermarkets into a profitable business.
The company’s announcement to the NZX did not indicate Gosh’s intentions with the brand, what the lease liabilities are, or what will happen with the two franchised Nosh stores.
Veritas was in dispute with its Constellation Drive franchisee, which took down its Nosh signs and refused to take Nosh vouchers after the brand got into trouble. Veritas said it did not accept the franchisee’s attempted termination. At this point, the two franchisee stores are not part of the deal, which covers the six company-owned stores.
Veritas chairman Tim Cook indicated he would speak to NBR tomorrow morning.
Veritas 2-year share price history (NZX.com)
At its June 30 balance date Veritas had bank debt of $33.3 million, including a $5 million facility from ANZ that was used to fund its purchase of Nosh.
Of that, $33.3 million $16.6 million was required to be repaid by June 2017 and $13.5 million by November 2017.
Revenue would be in a range of $50-55 million in the year ending June 30, 2017, compared with $56.5 million last year, the company said today.
Of that 2017 revenue, its Nosh Food Market unit was expected to deliver between $22-23 million , compared with $22.5 million in 2016. Sales at its Mad Butcher stores would fall to between $7-8 million, from 2016's $9.8 million, and The Better Bar Company would have sales of $21 million to $24 million, down from $24.1 million.
Veritas reported a full-year loss of $4.6 million for 2016 compared with a profit of $3.3 million in 2015. Its underlying net profit from continuing operations was $3.16 million. Its 2017 underlying profit guidance is $3-3.6 million.
The company says revenue will be in a range of $50-55 million in the year ending June 30, 2017, compared with $56.5 million last year.
More to come.
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