Palmer & Harvey has until the end of September to find £50m of funds to pay off its debt.
The wholesaler is searching for outside investment to meet the deficit, according to The Telegraph, but interested parties, such as Sainsbury’s, are believed to have been put off by the level of debt.
Potential investment is likely to be further hampered by the Competition and Markets Authority’s recent announcement that a merged Tesco and Booker would have both the motivation and potential to “substantially lessen” P&H’s ability to compete and potentially put the wholesaler out of business.
Describing retailer concerns, the regulator’s investigation also stated that third parties in particular had noted the significance of Tesco’s purchases to P&H’s business model and stressed the importance of P&H as a competitor in the supply of delivered wholesale services.
Following a turbulent month in April, P&H signed a three-year deal with Tesco, extended its credit terms with JTI and Imperial Tobacco and secured a new loan agreement with Barclays.
An industry source told Retail Express that the debt is more likely owed to Barclays than to the tobacco manufacturers.
A spokesperson for Palmer & Harvey cited its refinancing and the “interest from a number of trade and financial parties” as putting the company in a strong position to explore
They added: “This process will leave the group in the best possible position to capture the opportunities presented by an industry that continues to go through significant changes.”
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