Wheel turns for Evans Cycles as struggling chain eyes rescue

(c) Sky News 2018: <a href="http://news.sky.com/story/wheel-turns-for-evans-cycles-as-struggling-chain-eyes-rescue-11503069">Wheel turns for Evans Cycles as struggling chain eyes rescue</a>
 

Evans Cycles, the century-old retailer, is trying to find a buyer within days as a toxic high street trading environment threatens to claim another prominent victim.

Sky News has learnt that advisers to the company have asked potential bidders for the chain to table final takeover proposals by the end of next week, escalating concerns that the business may be in serious financial trouble.

A number of private equity firms, retailers and turnaround investors have been asked to consider making offers for Evans, according to people close to the process.

Details of the auction have emerged less than a fortnight after Sky News revealed that Evans' lenders were seeking more than £10m in additional funding for the business before the end of the year.

Like many high street retailers, Evans has slipped into the red because of a combination of rising costs and challenging trading conditions.

It was unclear on Thursday whether a buyer would examine an insolvency mechanism called a Company Voluntary Arrangement (CVA) in an effort to close Evans' worst-performing stores.

The chain‎ trades from just over 60 stores across the UK and traces its history to 1921, when the first FW Evans Cycles shop opened in south-east London.

The company, which is owned by the private equity firm ECI Partners, is being advised by PricewaterhouseCoopers (PwC), while AlixPartners is understood to be advising AIB and HSBC, the retailer's principal lenders.

It has been backed by a number of investment firms, including Active Private Equity‎, which sold it to ECi in 2015 for an undisclosed sum.

ECI is not expected to be part of any rescue deal.

The current talks with its lenders is not the first time that Evans has flirted with financial difficulty.

In 2016, it held similar talks with its banks amid a slowdown in bicycle sales.

This year, it parted company with Andy King, its chief executive for less than two years, and replaced him on an interim basis with Alan Fort.

:: Bike retailer Evans Cycles in talks with lenders as chain struggles

Evans competes with the likes of Halfords on the high street, and online rivals such as Wiggle.

It is the latest in a long series of major retail names to be forced into talks with its lenders as the industry contends with one of the most brutal trading environments for decades.

Chains such as House of Fraser, Mothercare (Other OTC: MHCRF - news) , New Look‎ and Toys R Us UK have either been forced into administration or secured creditor approval for radical restructurings.

Tens of thousands of jobs have been lost, with a number of CVAs sparking fury among landlords about the financial hardship being imposed on them.

Bosses across the industry have urged the Government to prepare an urgent overhaul of the business rates system in order to alleviate part of their financial burden.

Philip Hammond, the Chancellor, has ‎signalled the potential introduction of a new digital tax to level the playing field between digital and bricks-and-mortar retailers, although this idea has met a largely lukewarm response from the industry.

An ECI spokesman was unavailable for comment.

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