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The Quiet Storm

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Paperchase stores salvaged in Permira rescue deal

Written by on 26/01/2021

The future of the high street stationery chain Paperchase will be salvaged this week in a rescue deal led by a lender connected to Permira, the private equity giant.

Sky News has learnt that Paperchase will be sold through a pre-pack administration on Wednesday to Permira Debt Managers, which has provided funding to the business since 2015.

The deal is expected to see up to 90 of the chain’s 125 stores retained by the new owner, with approximately 1000 of its workforce also safeguarded.

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Debenhams to survive online but disappear from high street

While there will be some redundancies as a result of permanent store closures, it will nevertheless stand in contrast to other retail deals unveiled this week: Boohoo Group’s acquisition of the Debenhams brand and website, and Asos’s exclusive talks to buy TopShop from the collapsed Arcadia Group empire.

“This is not a Boohoo-Debenhams deal by any means,” said one insider.

“There is a genuinely viable high street business which can emerge from the pandemic.”

Monday’s Debenhams and TopShop developments encapsulated the profound impact that the COVID-19 crisis has had on physical retailers, accelerating changes which have been years in the making.

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Those deals are expected to cost well over 10,000 jobs amid fresh anxiety about the fate of Britain’s high streets as shopping destinations.

Paperchase is far smaller by comparison, but has also seen its revenue eaten into by digital rivals.

The closure of its shops in November and December wiped out the most crucial months of the year for the chain.

One party which had expressed an interest in acquiring Paperchase in recent weeks cast doubt on Permira Debt Managers’ long-term commitment to owning Paperchase.

Nevertheless, any eventual sale process conducted against the backdrop of more conventional trading conditions would be likely to draw interest from strategic and financial bidders.

Paperchase has been owned by Primary Capital, a private equity firm, since 2010, but has been forced to contend with tough high street conditions for years.

In 2019, it launched a company voluntary arrangement which saw it linking rent payments to store turnovers – making it one of the first retailers to do so.

PricewaterhouseCoopers is understood to be acting as administrator-in-waiting to the chain.

Paperchase and Permira Debt Managers declined to comment on Tuesday.

 Sky News

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