By Deborah Hill Cone
Thursday 5th February 2004 |
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PRG said when it bought the near-death company from its receivers in September last year for $48 million, that the transaction was financed with money raised in an earlier capital notes issue.
That was correct but new accounts show that at the same time, PRG extracted $14 million from its finance subsidiary Pacific Retail Finance to try to get the UK company back on its feet.
The $14 million balance owing is dated from the end of September but PRG said this week Powerhouse traded below expectations over the crucial Christmas period, so it is almost certain the figure will have increased.
PRG chairman Maurice Kidd said the loan was on an arms-length commercial basis in accordance with the trust deed and it was not a major transaction.
"$14 million to $15 million as a percentage of the total asset base of PRF ... is not a lot," Mr Kidd said.
PRF has total funds of $255 million but most of that money is made up of deposits from the public which have to be repaid. It has shareholder funds of $18 million.
PRF has also lent $11.4 million to another PRG subsidiary to invest in listed food company Burns Philp and has lent $3.6 million to a subsidiary of RMG, another company which has entrepreneur Eric Watson as a major shareholder.
Last week PRG issued an update saying Powerhouse did not meet its targeted sales volumes over Christmas and it will take longer than originally expected to restructure the business and achieve profitability.
Other electronics and appliance retailers in the UK reported a bumper Christmas Carphone Warehouse's sales were up 27% but Mr Kidd said that did not help Powerhouse because it had not had the time to get ready for the busy season.
"We had less than three months to get it back on its feet .... there wasn't enough time to do that," Mr Kidd said.
He said it was not a matter of just ringing up and putting in orders the company was in a state where PRG had to re-establish supply lines and set up credit facilities all of which took time.
PRF's latest prospectus from December last year states PRF purchases HP receivables and personal loans originated in PRG's retail divisions and other selected retailers.
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