Jun 28, 2019
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Spectre spooked as Bonmarché offer acceptance raises red flags

Jun 28, 2019

Bonmarché’s U-turn this week in supporting the £5.7 million buyout offer from its majority shareholder Philip Day may have taken other shareholders by surprise, but it looks like it could also have taken Day’s buyout vehicle Spectre Holdings by surprise.


Spectre, which had kept its mandatory offer open since May, said late on Thursday that the offer now has a time limit. The rules mean the company has to give 14 days notice of closing its offer and the closing date is now July 12.

Spectre, which already owns a little more than 50% of the company, was forced to make a full offer under stock exchange rules back in May, but the womenswear retailer had said that the offer undervalued it and recommended that shareholders take no action. Its U-turn this week may have seen it recommending the offer, but it continued to say that it was too low in relation to its long-term prospects.

Spectre seems to have been spooked by the U-turn and said that while it “welcomes the Bonmarché board's recommendation” it has some concerns.

It highlighted the uncertainty around the retailer and noted “the Bonmarché board's comments that the risks for the business going forward are heavily weighted towards the downside and that the current clothing market is not following the patterns of previous years.”

It agreed with the firm’s intention to cut more costs but added that it "now believes that the passage of time, and a further decline in the performance of Bonmarché, has eroded Spectre's ability to provide the advice, guidance and support needed to secure the long-term future of the business, its stores and employees.”

And it’s “especially concerned by the suggestion that PwC, Bonmarché's auditor, may shortly express uncertainty about the company's ability to continue as a going concern in its FY19 accounts.”

What happens next depends very much on how many shareholders sell their shares. Those who’ve held back so far may rush to sell in the light of concerns that the company may not have a future otherwise and they could lose their entire investment. But they may not, and the firm’s share price actually rose 5% in early trading on Friday.

Spectre will de-list Bonmarché if it manages to build its shareholding up to 75% so watch this space.

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