REDGroup Administration: Date for second creditors' meeting announced

REDgroup administrators Ferrier Hodgson has announced that second creditors' meetings  will take place on Thursday, 4 August in Melbourne and Auckland.

The administrators have also made available separate financial reports about the Australian and New Zealand businesses of REDgroup, which are covered by the administration.

Both reports outline what will be voted on in the creditors' meetings, including a proposed deed of company arrangement (DOCA) to recover some of the funds owed to REDgroup’s unsecured creditors including gift card holders, trade creditors and landlord creditors.

New Zealand DOCA
Ferrier Hodgson will hold a 'watershed' creditors’ meeting in Auckland, New Zealand on 4 August to consider a proposed Deed of Company Arrangement (DOCA).

The proposed New Zealand DOCA would involved the distribution of payments from its NZ$3.14 million 'creditor fund' to the administrators of 'up to an amount in total which does not exceed NZ$390,000 (including GST) and associated costs and expenses', with the remaining NZ$2.75 million being divided among other parties including payments up to NZ$18,700 per eligible employee.

Ferrier Hodgson reported that in New Zealand REDgroup had had a number of retention of title claims brought against it by suppliers to the value of NZ$12.36 million. However, the administrators said that they had 'reached agreement with the majority of suppliers, resulting in the payment of $3.6 million by the Administrators' against this value of claims.

The administrators report outlines the financial results for the New Zealand-based REDgroup companies (excluding the online business) from the 2007-08 financial year to the 'last twelve months' (LTM) to December 2010. EBITDA from trading activities for this period dropped from NZ$39.1 million in 2007-08 to NZ$30.5 million in the 2009-2010 financial year and NZ$26.4 million for the LTM to December 2010--a figure the administrators said was 'largely attributable to the 55% decrease in Borders New Zealand’s EBITDA, from NZ$4.2 million in 2007-08 to NZ$2.9 million in 2009-10 and only NZ$1.9 million for the LTM to December 2010.

The administrators reported that New Zealand sales for December 2010 were 'not as high as expected as a result of the decision at the Australian Group level to reduce shifts at the Auckland distribution centre'. 'This resulted in a significant sustained backlog in the distribution centre during stock build for Christmas'. The period was also affected by ‘financing constraints', which mean the group 'purchased NZ$5 million less stock at cost than in December 2009'.

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