Planet Organic has called in insolvency lawyers as it scrambles to find new investors in order to secure its survival.
Sky News reports the business filed a notice of intention to appoint administrators on Thursday, giving it some breathing room from creditors while rescue negotiations continue.
According to city sources, Planet Organic needs a multimillion-pound capital injection by the middle of April to keep going .
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Potential buyer Waitrose pulled out of talks late last week but talks with a number of interested parties are said to be continuing.
Sources say any sale of the company could take place through a pre-pack administration procedure, though Planet Organic’s management, led by CEO George Dymond, is committed to preserving the company as intact as possible.
Any insolvency event would jeopardise a portion of the chain’s 360-person staff.
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In a message to staff on Thursday seen by Sky News, Mr. Dymond said: “Over the past 12 months, we have been extremely busy fundraising in order to raise money to support the business and unlock our store expansion plan.
“Despite our wonderful stores being largely profitable, a herculean effort by the buying team to improve our margins and a huge improvement in the costs of running both stores and the e-commerce business, it is a fact that the business is still loss-making.
“In reality, we have simply not got back to the levels of sales that we were seeing before the pandemic. So, while we have taken every possible action to improve our position, including additional investment from our existing shareholders, we have so far been unsuccessful in raising sufficient funds needed to support the business and the growth plan.
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“Since the beginning of the year, we have been in advanced discussions with a potential investor with a view to them supporting the business, putting a platform in place to enable us to achieve this growth.
“Regrettably and unexpectedly these discussions ended last Friday without an investment being agreed upon. This is largely because of the current uncertainty in the retail sector, as well as market caution more broadly.
“This unfortunately means that the future of Planet Organic is currently uncertain.
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“We are still working hard alongside our advisors to explore alternative options to secure investment which will enable us to preserve our amazing business and we remain in dialogue with a number of other interested parties.
“In the meantime, however, we have had to take legal steps to protect the position of the business to afford us the time to be able to find a solution to the challenging situation we face, including filing at court a notice of intention to appoint administrators which is the first step in a potential administration process.
“We know that this will create more media attention and a lot of questions from our customers – the key message is that it is business as usual for now.
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“I want you all to know how very sorry I am that we are in this position – I am conscious that this will be a very uncertain time for you all.
“As a short-term measure, and in order to make sure that everyone is paid for work they have done, we will be running an interim payroll tomorrow.
“For now that means it is business as usual and your support, as always, is greatly appreciated and essential to give Planet Organic the very best chance of securing a healthy future.”
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Renee Elliot started Planet Organic in 1995, and the company has been working with Interpath Advisory on a strategic review since early this year.
The 13-store chain offers organic food and drink, as well as healthcare and bodycare products.
Like many retailers, its recent success has been hampered by the pandemic and decreased footfall in city centres.
It is believed to have lost money in each of its last two fiscal years.
Source: Sky News
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