Homebase, Owned by Hilco, Comes Under scrutiny for COVID support after profit surge

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Homebase, Owned by Hilco, Comes Under scrutiny for COVID support after profit surge


Homebase owners are facing a close review of the financial support the DIY chain has taken from taxpayers during the pandemic after seeing its profits rise last year.

Sky News can reveal that Homebase, which came close to collapsing in 2018, received nearly £ 40million in government funding in 2020 in the form of trade tariff relief and payments made under the scheme. leave.

Sources said on Friday that the chain had not repaid that funding, despite the fact that earnings before interest, taxes, depreciation and amortization (EBITDA) before special items were multiplied by 15 last year to more than 60 million pounds sterling.

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Owner Hilco closed a number of stores as part of a bailout restructuring three years ago

According to accounts filed last week at Companies House, Homebase “did not take out the government loans available as part of the COVID-19 pandemic support measures, but gained access to the job retention program and to lower corporate interest rates ”.

The accounts show the business rate relief was worth over £ 28million, while the holiday funding paid by the Treasury is recorded in the accounts as having been valued at £ 9.6million.

Homebase declined to comment despite repeated questions about its use and continued government support, while Ian Topping, its chairman, did not respond to multiple requests for comment.

If Homebase hasn’t repaid any of this taxpayer support, it will add the DIY chain to a list of retailers, including Iceland and the Co-op Group, who have refused to repay some or all of the funds they received from the government.

A number of other DIY companies, including Travis Perkins, have announced they will pay back tens of millions of pounds in government funding.

An industry source said that Homebase’s failure to proactively announce its earnings turnaround suggested it was trying not to draw attention to the state support it had received. .

Homebase is owned by Hilco Capital, a frequently controversial backer of retailers that counts HMV, the music and entertainment chain, among the companies he previously owned.

The chain employs 5,600 people and operates through more than 130 stores across the UK, having close a substantial number as part of a rescue restructuring three years ago.

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Travis Perkins has said he will repay government support. Photo: Travis Perkins

His accounts show the highest-paid manager – likely Damian McGloughlin, his managing director – received more than £ 1.4million last year.

They also show that its 135 stores were all profitable, with year-end net cash of £ 85million.

In November 2020, Hilco put the company up for sale, which his accounts said was “to identify if a new investor could help accelerate the growth program.”

Sky News revealed earlier this year that Hugh Osmond, the prominent entrepreneur, was assembling a £ 300million bid for the company, although talks subsequently collapsed.

A future sale or an IPO remain potential future options.

A sale of £ 300million would be a remarkable result for Hilco, who bought Homebase for a nominal fee in 2018 after a disastrous spell under the ownership of Wesfarmers, an Australian group.

Wesfarmers’ stint as owner, in which it attempted to rebrand the chain as Bunnings, was one of the most disastrous forays into the UK by a foreign retailer.

The home furnishings retailer entered into a voluntary corporate agreement (CVA) shortly after its acquisition by Hilco, which resulted in dozens of store closings and more than 1,500 job layoffs.

It has since recovered to profitability and has become one of the big winners in retail from the COVID-19 crisis despite the initial closure of its stores.

Hilco, hired Lazard, the investment bank, to sell Homebase as it sought to capitalize on a sales boom to foreclosure-hit Britons.

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