Grafton Group subsidiary, Atlantic Home Care Ltd, set for restructure

Grafton Group has this morning released the following statement in relation to its Atlantic Home Care Ltd business:

Atlantic Home Care Ltd ("Atlantic or the Company"), a wholly owned subsidiary of Grafton Group plc ("the Group"), has today filed a petition seeking the appointment of an examiner and Atlantic now has Court protection. Under Irish law, an Examinership process is designed to facilitate the survival of a company through the formulation of proposals by the Examiner of a compromise scheme of arrangement.

Atlantic is a member of the DIY Division of the Group operating in Ireland and was acquired as part of the Heiton Group in 2005. The business has been severely impacted by the recession, in particular by the decline in consumer spending and in the housing sector. In addition, the Company's ability to reduce operating costs has been inhibited by the retention of "upward only" rent reviews for existing leases.

Atlantic accounts for 2.75 per cent of Group revenue and has traded at a loss since 2007. The turnover of Atlantic has fallen by 44 per cent from €100m to €56m in that period and it continues to trade at a loss in the current year. The DIY Division as a whole has traded successfully and profitably in a demanding retail environment throughout this period but its performance has been held back by the Atlantic losses. These losses are no longer sustainable and a restructuring of Atlantic via the Examinership is intended to bring these to an end while maximising the potential for the business to survive.

An Independent Accountants' Report from KPMG on Atlantic has concluded that it is possible for a sustainable and profitable business to emerge from the Examinership process based on a restructuring of the Company.

Subject to the views of the Examiner, the restructuring may involve closure of at least five stores and is subject to agreement being reached with landlords on adjusting rents to current open market levels. Woodie's DIY Ltd is prepared to continue supporting Atlantic throughout the Examinership and has also indicated that it would be prepared to invest in the Company to facilitate a scheme of arrangement for the restructured business.

Atlantic has no bank debt and is not part of the Group's financing arrangements and accordingly, this development will have no impact on financing and trading arrangements in the Group and its other subsidiary companies in Ireland, the UK and Belgium.

Source : Grafton Group Plc
http://investor.graftonplc.com/grf/investors/news/rns/rnsitem?id=20144127