Around 90-100 Paperchase stores are on course to continue trading (once lockdown restrictions are lifted) as a result of a pre-pack deal that was finalised yesterday (January 28) at the courts.
Being positioned as a ‘rescue deal’, the finer points saw PwC being officially appointed administrators of the company while a substantial part of the business (including the brand name and ecommerce side) has been acquired by Aspen Phoenix NewCo. The latter is a shell company, backed by Permira Debt Managers, which has provided funds for Paperchase since 2015.
Coming at a time when well-known bricks and mortar retail names, such as Debenhams and Top Shop, have been sold on but will now only continue as online brands, the Paperchase outcome means that the greeting card and stationery retailer will continue to have a sizeable presence on our high streets. Around some 27+ stores however are not expected to re-open and while 1,000 of Paperchase employee jobs are now safe, there are likely to be some 250 direct job losses.
‘The new company structure creates a fundamentally solid foundation from which to deliver on a long-term strategy that’s fit for purpose in this new retail environment,’ reads the official statement issued shortly after the deal was done, with a “comprehensive transformation programme” to get underway.
Paperchase had been trading under a Notice of Intention to appoint administrators since 5 January 2021 as solutions were explored to ensure the future of the brand with lockdown closures being cited as the main reason for the company’s financial woes. The retailer had been granted a second Notice of Intention which bought the company more time. (https://www.pgbuzz.net/paperchase-gains-more-time-as-a-second-notice-of-intent-is-granted-by-the-courts/)
While Aspen Phoenix NewCo is now the owner of Paperchase, PwC as administrator is now to be in dialogue with creditors, which includes many greeting card publishers, to discuss unsettled invoices.
Commenting on the new set-up, Olly Raeburn who became CEO of Paperchase last September (having joined the retailer as chief marketing officer in June 2019) said: “The cumulative impact of lockdowns and related restrictions means that it is imperative we make this tough but necessary decision to safeguard Paperchase’s future.”
In taking this action, he believes gives Paperchase “the best opportunity to ensure that the business is fit for purpose in this new retail environment. We have been in close dialogue with all of our stakeholders through this process and are grateful for their continued support.”
Top: Paperchase had moved to largely turnover based rents with landlords.