Colorado clothing chain in receivership

Transtasman clothing and footwear retailer Colorado has been placed into administration and receivership after bankers rejected the private equity-owned company’s restructuring proposal.Secured creditors owed A$400 million have appointed Ferrier Hodgson partners James Stewart, Brendan Richards and Will Colwell as receivers and managers of the group.

The company employs about 4000 people and has 434 stores in Australasia, including 10 stores in New Zealand that employ about 30 people.Hong Kong-based private equity firm Affinity Equity Partners bought Colorado in 2007 for A$430 million.

Colorado’s receivership is the latest in a string of failures by private equity-owned companies in Australasia, including Whitcoulls and Borders owner Redgroup Retail being put into voluntary administration and Yellow Pages Group debt holders taking a $1 billion haircut.The Colorado board put out a statement yesterday expressing disappointment that the proposal to lenders hadn’t been accepted.

“The board and management last week put forward a proposal formulated with management and our advisers, KPMG, detailing a plan which recommended a way forward for the company and would have secured increased returns to lenders.“It would also have provided a basis for motivating staff as well as retaining management, suppliers and customers to deliver a positive outcome.

“The board subsequently revised the proposal in an effort to come to an agreement with lenders. Unfortunately, both proposals were not supported by the requisite number of lenders.”

The company had been struggling with the “difficult retail environment” for some time.

“The last few months, in particular, have been very challenging given the effects of a tough trading environment in Australia.

NBR staff
Thu, 31 Mar 2011

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Colorado clothing chain in receivership