Unbound Group terminates sales process, profitability remains resilient

Unbound Group, the owner of Hotter, has announced that it will be ending its formal sale process after its board stated that no potential offers had full support.

The company had initially launched the process alongside a strategic review on May 19 in a bid to explore options that could maximise value for shareholders and other stakeholders.

However, over the course of the month, offers received were deemed incapable of receiving shareholder support, according to a regulatory filing by Unbound, resulting in the termination of the sale process. It was further noted that there were no ongoing discussions with potential offerors at the time of termination.

Unbound added that it would continue to pursue a strategic review for its main operating subsidiary, for which offers are continuing to be received and reviewed. There is no certainty as to whether these offers will result in the recovery of value for shareholders, and can be altered or terminated at any time.

The news came as Unbound reported “encouraging” trading performance, with the group’s profitability falling in line with expectations due to the increasingly evident impact of its previously implemented cost reduction measures. Initially, the scheme was forecast to result in annualised cost savings of around 2.3 million pounds, which the group estimated was to be achieved by Q3 of FY24.

In the first four months of the current financial year, the company said that its fixed cost base had been reduced 9 percent YoY, with savings expected to increase as further actions take effect.

Unbound eyes two million pound equity raise

In light of the performance, Unbound said that it was also assessing the possibility of an equity fundraise between 1.5 million and two million pounds to support a formal restructuring plan in order to secure a “better outcome for the group”.

Currently, the company said it had received some positive feedback from major shareholders, with the potential to draw in further participation for the equity raise.

Despite its overarching positivity, Unbound’s revenues still continue to be impacted by what the group cites as “liquidity constraints”. It noted that it was currently reliant on the waiver of certain covenants from existing borrowing facilities.

However, following the “seasonally loss-making months of February and March”, the company did report an unaudited EBITDA of around 1.1 million pounds for April and May, with a margin of 14 percent, up from 9 percent in the year prior.

Last month, Unbound also announced plans to close its loss-making direct-to-consumer sales channels in the US and EU, recentering its efforts around its core Hotter brand within the UK market.