UP TO 114 full and part-time jobs could be lost and five stores closed as Grafton Group bids to save its loss-making Atlantic Homecare DIY chain.
The 13-store chain has been losing money for the last five years and was yesterday placed under High Court protection from its creditors. Declan McDonald of PricewaterhouseCoopers was appointed interim examiner to the business.
The High Court heard that the business lost €11.2 million last year and €3.1 million up to the of April. According to an independent accountant’s report, only extensive restructuring can save Atlantic Homecare and turn it into a sustainable business.
That restructuring is likely to involve the closure of five stores, at Liffey Valley in Dublin, Pouladuff in Cork, Newbridge in Kildare, Childers Road in Limerick and Wellpark in Galway.
The closure of the five stores would result in the loss of 38 full-time jobs and 76 part-time positions, according to a statement released yesterday by Atlantic’s owner, Grafton Group plc.
The group stressed that its priority was to save the other eight stores in the chain and the 234 jobs they support.
Grafton blamed the fall in consumer spending and excessive rents, for Atlantic’s problems, which it said were aggravated by the collapse in construction.
“As a retailer with exposure to the construction sector, the 95 per cent fall in housing completions since 2007 from 90,000 houses to 5,000 this year, has exacerbated the position,” Grafton said.
“Extensive reductions in operating costs have not been sufficient to offset these market trends and the ability to reduce costs further has been negated by high upward only rent levels in the retail sector.”
Atlantic Homecare is paying €10.5 million in rent for its properties, while the going rate is €5 million.
If the High Court confirms Mr McDonald’s appointment when the case comes back before it on June 15th, he will have up to 100 days to formulate a rescue plan, known as a scheme of arrangement.
The court heard yesterday that the company is likely to seek to repudiate the leases on the stores it intends closing, and will also seek to write down some of Atlantic’s debts.
These amount to €53.7 million in total. Of that, €13.3 million is due to Grafton’s other DIY chain, Woodies, which has been supporting Atlantic for the last five years. Grafton acquired Atlantic when it bought rival Heiton for €336 million in 2004.
Woodies indicated it is willing to continue its support during the examinership, and that it would be prepared to invest in it in the future as part of any rescue plan.
Siptu organiser Denis Hynes said yesterday that the trade union would engage with the interim examiner and the company to save as many jobs as possible.
