Deal of the week – Tempo group

SJ Berwin drives Tempo administration for PwC

SJ Berwin is advising PricewaterhouseCoopers (PwC) on its petition for the administration of the Tempo Group.
Tempo's relationship with SJ Berwin stretches back 15 months to when the company approached the firm and asked it to advise on its debt restructuring. Tempo said it could not carry its debt burden and SJ Berwin advised on a debt for equity swap.
Last month, the company came back to SJ Berwin saying it was unable to finance its Christmas stock.
At this point the creditors, Lloyds TSB Bank and Chase Manhattan, were in a position to appoint receivers. But because receivership does not provide creditors with protection, the banks decided that it would be more beneficial for all parties to trade Tempo through Christmas and then wind the company down.
On 24 September, PwC petitioned for all three Tempo companies to be put into administration. The petition was granted at 5pm on 31 September.
PwC was brought into the negotiations four months ago, when the company admitted that it was in difficulties again. SJ Berwin was the obvious choice to advise PwC, considering its earlier involvement with the company and subsequent knowledge of the restructuring.
Lead partner on the deal Adam Plainer said: “The company has long-term insolvency issues and thinks that administration was the right course of action.”
SJ Berwin's initial relationship was founded through a corporate partner's relationship with Tempo's non-executive chairman, who was put in place by one of the venture capital houses with a stake in the business.

“The company has longterm insolvency issues, administration was the right course of action”
Adam Plainer, SJ Berwin

Plainer led the team, assisted by Omar Ameer and James McLeod. Plainer said that he will also have to draw on the property and employment teams when the company begins to wind down.
Plainer, who was formerly at Hammond Suddards Edge, joined SJ Berwin in June 2000. The Tempo reconstruction was the first job he took on after his arrival.
Tempo Group has a turnover of £150m. It employs approximately 800 people and it has 37 stores across the South East.
The group comprises three companies, which needed a £5m seasonal working capital facility to enable them to purchase the stocks they needed to trade through to Christmas. However, because of poor trading results, management had been unable to convince the banks to provide the facility. The companies are all currently insolvent on a balance-sheet basis.
PwC said it will pursue the sale of the companies' business and operations while continuing to trade from its retail stores. It estimates that £1m will be needed to carry out this strategy.
Nevil Kahn and Tony Lomas are the two partners at PwC advising the banks.