HSBC snaps up 47% stake as part of Jessops rescue deal

Published on Tuesday 29 September 2009 21:16

BRITAIN'S biggest photographic retailer has agreed a survival deal that secures some 2,000 jobs but leaves only £100,000 to be split between the group's embattled shareholders.

Jessops, which has seen its sales slide and debts rise in the face of online competition and a spending slowdown, admitted yesterday that it had been facing collapse if the rescue deal had not been hammered out.

It said suppliers had been unwilling to support it in the run-up to the key festive trading period.

The chain, which runs more than 200 stores selling digital cameras and camcorders, will now place its assets into a new company, whose largest backer will be the banking giant HSBC, with a 47 per cent stake.

Pension trustees will own a third of the new-look Jessops, with the remaining 20 per cent held by an employee trust.

That leaves only 100,000 to be split between shareholders in the old business.

The group, which warned it would breach its lending terms in January, is rushing through the latest restructuring after pressure from its banker.

HSBC has given the restructured Jessops a 54 million loan to pay the debts of the old business but is waiving 34m of this in return for its 47 per cent stake.

Jessops has been closing branches and shedding jobs in a bid to turn around its fortunes. It has reduced its central office headcount from 375 to 125 in the past two years, while in February it closed 21 outlets – many of them in Scotland.

Executive chairman David Adams said the restructuring would ensure the firm remained "a fundamentally strong business with a strong presence on the high street".

He played down talk of further store closures as a result of the rescue deal.

"The bank has signed off this restructuring on the back of a plan, and that does not involve any store closures," Adams stressed.

In May, the firm reported first-half losses of 6.3m following a full-year deficit of almost 50m in the previous financial year.

Its last trading update pointed to worsening sales trends, with like-for-like sales down 4.7 per cent for the 12 weeks to 16 August, following a year-on-year decline of 3.6 per cent in the eight weeks to 24 May.

The company began life in 1935 when Frank Jessop opened his first shop in Leicester.

It has surfed the boom in digital cameras in recent years but struggled when supermarket and internet competitors muscled into the market, forcing a major overhaul of the group in 2007 and the swath of store closures.

It has been focusing much of its attention on sales of more-profitable digital single lens reflex cameras and accessories.