Good morning folks.

Stories on the radar today:

Conviviality (LON:CVR) (suspended)

It is game over at Conviviality.

Last night, the company revealed there was insufficient demand to raise £125 million in new equity. It was looking at its options, but the dreaded phrase was used:

The Board believe that shareholders in the Company will receive little-to-nil value.


Unless circumstances change, and in accordance with statutory requirements, the Board intend to appoint administrators within 10 business days. The secured creditors can, however, appoint administrators without the requirement for notice.

It's amazing how quickly things can unravel.

Up until March 14, we didn't know about the surprise tax payment due to HMRC. We were expecting another weak financial performance this year after receiving another profit warning, but insolvency did not appear to be imminent.

Then, the shares were promptly suspended on March 14 as the company scrambled to find the £30 million due to HMRC.

But it turns out that £30 million would not have been enough. It said yesterday that £125 million was "the minimum amount required to adequately recapitalise the business." This is what the wheels falling off, looks like.

I've written about Conviviality plenty of times, covering it in 2016 and early 2017 on other websites (here and here and here), and also covering it in this report.

Despite being consistently sceptical towards it, I take no pleasure in seeing it fail. Hopefully, most employees will retain their jobs, or find similar jobs with whoever buys up their units.

It's certainly unhelpful news for the drinks industry. Matthew Clark is a structurally important wholesaler, and many suppliers and customers would much prefer for it to survive. It's only fitting that they, to the extent that they are creditors to Conviviality, will find that they are now effectively its new owners. There is a risk of…

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