DSH dshe holdings limited

News: UPDATE 1-Australia's Dick Smith appoints administrators

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    MELBOURNE, Jan 5 (Reuters) - Australian electronics retailer Dick Smith Holdings Ltd (DSH) said on Monday it appointed administrators after it was unable to secure short term funding, and the stock was delisted only two years after being sold by a private equity firm.

    The move will add to concerns about listings of companies offloaded by private equity firms after short periods.

    In December 2013, Anchorage Capital Partners sold 80 percent of Dick Smith in an IPO worth $315 million, little more than a year after buying it from Woolworths Ltd (WOW) for less than a third of that.

    When Dick Smith went into a trading halt before the start of trading on Monday, its market capitalisation was A$84 million ($60.30 million).

    The move to appoint administrators came after the company issued profit warnings in October and November, citing weaker than expected sales, which sent its shares plunging. The company then reduced retail prices over the crucial Christmas period to revive sales. .

    But in a statement on Tuesday, it said sales and cash generation in remained below expectations and that directors believed the company would not be able to secure short term funding to order stock for the next four to six weeks.

    "Whilst confident on the long-term viability of the company, the directors have been unsuccessful in obtaining the necessary support of its banking syndicate to see it through this period," Chairman Rob Murray said in the statement.

    "The Directors are of the view that without this support, there is no option other than to appoint a Voluntary Administrator."

    The company appointed McGrathNicol as administrator, and said it planned to explore all options to allow it to continue as a going concern.

    "The pain of a wipeout will likely increase general suspicion about the value in buying into private equity IPOs," said CMC Markets chief strategist Michael McCarthy in a note.

    Dick Smith shares last traded at A$0.35, compared to their A$2.20 issue price and 12-month trading high of A$2.26, reached in May 2015.

    ($1 = 1.3931 Australian dollars)

 
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