PwC has been brought in to advise Conviviality, the wholesaler and distributor of alcohol and impulse products, after the company discovered it had a £30m tax bill which had not been included in its short term cashflow projections
The AIM-listed company, which owns the Bargain Booze and Wine Rack off licence chains, has asked for trading its shares to be suspended.
In a regulatory announcement, Conviviality said: ‘The company yesterday identified a payment due to HMRC of approximately £30m which falls due for payment on 29 March 2018 and which has not been accrued for within its short term cash flow projections.
‘This has created a short term funding requirement. The Company's announcement on 13 March 2018 confirmed an expected range of adjusted EBITDA of between £55.3m and £56.4m. To the extent that the current situation creates operational difficulties, this may negatively impact the adjusted EBITDA range.’
Conviviality says it has engaged PwC to assist it in its forthcoming discussions with HMRC and its key stakeholders including its lending banks, credit insurers, suppliers and other creditors, as well as to determine the potential impact of any resulting funding requirement on the company's adjusted EBITDA expectation and compliance with its banking covenants. Following preliminary advice received from PwC, whilst there can be no guarantee, the board says it believes this short term funding requirement will be satisfactorily resolved.
Earlier this month Conviviality put out a statement that it had detected a ‘material error’ in its financial forecasts for adjusted EBITDA of £69.1m to £70.5m. The company now says this related to an arithmetic error, and it now expects adjusted EBITDA for the current year to be approximately 20% below market expectations, in an expected range of £55.3m to £56.4m.
Report by Pat Sweet
