Adelie Foods installs Deloitte as administrator
Deloitte has been appointed to administrate UK food and drink firm Adelie Foods, which has collapsed after its finances were destabilised by a series of private equity sales. There have been no immediate redundancies announced amid Adelie’s 2,200-strong workforce.
Adelie Foods is one of Britain’s biggest suppliers of sandwiches and food-to-go, however a continued decline in its performance in recent years, combined with multiple changes in ownership, saw it in increasing distress before 2020. Now, the impact of the coronavirus seems to have been the straw that broke the camel’s back, as it has appointed administrators.
The company is understood to have been in rescue talks for several weeks, however a potential acquisition by an unnamed company was scuppered, according to insiders, as it could not gain the necessary support from industry watchdogs in time. As a result, professionals from Deloitte will now undertake an insolvency process, with employees having been informed of the development.
Headquartered near Heathrow, Adelie employs around 2,200 staff, a large amount of whom have been placed on furlough since March due to the coronavirus pandemic. According to various reports in the British press, no immediate redundancies have been announced as Deloitte looks to sell the company out of administration – however, the joint administrators stressed that may change if a buyer cannot be secured quickly.
Rob Harding, a Restructuring Partner at Deloitte, said, "The current pandemic is having a devastating effect on consumer-facing businesses and suppliers into them, such as Adelie. The impact of Covid-19 on the company's order book resulted in a material funding requirement and, as a result, we have been working hard with Adelie's management to try and secure a buyer to ensure the right longer-term future for the business."
The company is reported to have been in talks over a deal with listed food supplier Greencore, while Samworth could be another contender, and it is hoped that despite the Covid-19 crisis, its position in the food and drink sector means Adelie will attract a buyer in the coming weeks. The company’s clients currently include coffee chains such as Caffè Nero and supermarkets including Lidl, however it has lost major contracts with J Sainsbury and ASDA in the last five years.
One of the things which seems to have affected Adelie negatively is a consistent lack of consistency in ownership. It was last acquired by UK asset management company Intermediate Capital Group from US private-equity firm H.I.G. Capital in 2016, but that transaction came just 18 months after H.I.G. – leveraging debt provided by ICG – bought Adelie from India Hospitality Corp (IHC). Three years earlier, IHC had purchased Adelie from UK private equity firm Duke Street Capital.
The churn of private equity firms taking on the firm – and the propensity of such firms to strip assets from properties to make rapid profits – seems to have left Adelie in a delicate financial position. Its most recent set of accounts publicly available are for the 12 months to 30 September 2018. Then, turnover was up 10% year-on-year at £248.5 million, however Adelie still made a loss during the year of £15.4 million, having also reported a hefty loss of £26.8 million 12 months earlier.
