Hollywood Cinemas appoints Parker Andrews as administrator

12 February 2019 Consultancy.uk

A chain of cinemas in the East of England has folded, following an especially poor year of business. Hollywood Cinemas was forced to appoint administrators from insolvency practitioner Parker Andrews, having closed the majority of its theatres while citing a number of films had performed poorly in recent months.

Norfolk’s Hollywood cinema chain has fallen into administration after some 30 years in business, with two of the three theatres closing immediately. Sites in the sea-side town of Great Yarmouth and East Anglia’s largest city, Norwich, saw doors shut – putting more than 28 largely part-time jobs at risk.

The Norwich venue has served as something of a community hub to cinema goers, having previously hosted the international premiere of Alan Partridge film Alpha Papa in 2013, and the Norwich Radical Film Festival in 2016. Meanwhile, the Great Yarmouth venue was refurbished in late 2017, receiving new seats and screens in a move which the chain’s Director, Trevor Wicks, hailed as “a vote of confidence” in the facility, reportedly suggesting to local press that things were looking up in the town. However, the poor trading conditions which dogged the wider economy throughout 2018 seem to have taken a toll on the cinema chain.

Hollywood Cinemas appoints Parker Andrews as administrator

In a statement confirming the appointment of administrators in February 2019, Wicks cited a plethora of factors as having done for the company. These ranged from the ‘Beast from the East’ winter storms which ravaged the UK early in the year, to the heat wave that replaced it months later, as well as a World Cup campaign which kept potential cinema-goers glued to a different set of screens, as demand for tickets fell.

Commenting on the news, Wicks said, “It is with a very heavy heart that I have had to place the company into administration. I would like to thank the millions of loyal customers that we have had over the last 30 years and, most importantly, the wonderful staff, both past and present.”

Speaking to the Evening News, Wicks also noted that high levels of competition (while Great Yarmouth has the one cinema, Norwich hosts three other chains to rival Hollywood Cinemas), and that a succession of films which performed poorly in recent months. As a result, administrator Nick Cusack of Parker Andrews will now look for offers to sell the Great Yarmouth and Norwich theatres to continue trading under new ownership. The chain’s Dereham venue has already been purchased.

Parker Andrews is a professional services firm which specialises in insolvency, business recovery and turnaround procedures. Focusing largely on work in the southern half of England, the firm provides solutions to help individuals and businesses in financial stress from offices in Cambridge, Ipswich, Norwich, London and Portsmouth.

A statement from the firm said, “The administrator has commenced the process of selling the business and assets of the company and any interested parties should make contact with his agent, Roger Cutting of Charterfields. A sale has been completed for the Dereham site and offers are invited on the remaining sites at Norwich and Great Yarmouth.”

Related: UK box office top 10 sees musicals challenge Hollywood blockbusters.

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8 tips for successfully buying or selling a distressed business

18 April 2019 Consultancy.uk

Embarking on the sale of a business is one of the most challenging experiences a management team can undertake. Even serial dealmakers acknowledge that the transaction process can be gruelling, exposing management to a level of scrutiny and challenge through due diligence that can be distinctly uncomfortable.

So, to embark on a sale process when a business is in distress is twice as challenging. While management is urgently trying to keep the business afloat, they are simultaneously required to prepare it for scrutiny by potential acquirers. Tim Wainwright, an experienced Transactions Partner with Eight Advisory, says that this dual requirement means sellers of distressed businesses must focus on presenting their business in a way that supports buyers in identifying value, whilst simultaneously being open about the causes of distress. 

According to Wainwright, sellers of distressed businesses should focus on eight key aspects to ensure they are as well prepared as possible:

  • Cash: In a distressed situation cash truly is king. Accurate forecasting and day-by-day cash balances are often required to ensure any buyer is confident that scarce cash reserves are under proper control. 
  • Equity story and turnaround plan: Any buyer is going to want to understand the proposed turnaround strategy: how is the business going to enact its recovery and what value can be created that means the distressed business is worth saving? Clear presentation of this strategy is essential.
  • The business model: Clear demonstration of how the business model generates cash is required, with analysis that shows how financial performance will respond to key changes – whether these are positive improvements (e.g., increases in revenue) or emerging risks that further damage the business.  Demonstrating the business is resilient enough to cope with these changes can go a long way to assuring investors there is a viable future.
  • Management team: As outlined above, this is a challenging process. The management team are in it together and need to be consistent in presenting the turnaround. Above all, the team needs to be open about the underlying causes that resulted in the distressed situation arising.  A defensive management team who fail to acknowledge root causes of distress are unlikely to resolve the situation.

8 tips for successfully buying or selling a distressed business

  • Financing: More than in any traditional transaction, distressed businesses need to understand the impact on working capital. The distressed situation frequently results in costs rising as credit insurance becomes more difficult to obtain or as customers and suppliers reduce credit. Understanding how these unwind will be important to the potential investors.
  • Employees: Any restructuring programme can be difficult for employees. Maintaining open communications and respecting the need for consultation is the basic requirement. In successful turnarounds, employees are often deeply engaged in designing and developing solutions. Demonstrating a supportive, flexible employee base can often support the sale process.
  • Structuring: Understanding how to structure the business for the proposed acquisition can add significant value. Where possible, asset sales may be preferred, enabling buyers to move forward with limited liabilities. However, impacts on customers, employees and other stakeholders need to be considered.
  • Off balance sheet assets: In the course of selling a distressed business, additional attention is often given to communicating the value of items that may not be fully valued in the financial statements. Brands, intellectual property and historic tax losses are all examples of items that may be of significant value to a purchaser. Highlighting these aspects can make an acquisition more appealing.

“These eight focus areas can help to sell a distressed business and are important in reaching a successful outcome, but it should be noted that it will remain a challenging process,” Wainwright explains. 

With recent studies indicating that the valuation of distressed business is trending north. With increased appetite from buyers who are accustomed to taking on these situations, it is likely that more distressed deals will be seen in the coming months. “Preparing management teams as best as possible for delivering these will be key to ensuring these businesses can pass on to new owners who can hopefully drive the restructuring required to see these succeed,” Wainwright added.