Shanton receivership sale finalised
The sale of the Shanton fashion chain to a consortium led by Auckland businessman Mandeep Pala has been finalised.
While the sale price was not publicised, Shanton's receiver said it was much less than the $7.2 million owed to the company's secured creditor.
"Whilst there was a significant shortfall in the amount owed to the secured parties they are very supportive of the sale on the basis that the employment of many long serving loyal staff has been preserved and that Shanton will continue to be a feature in the retail fabric of New Zealand," said a statement from receiver Anthony Harris.
The company also owed over a million dollars more to the Inland Revenue Department and trade creditors, with the latter unlikely to be paid as a result of the deal.
Shanton went in to receivership in October and the receiver said any sale was reliant on the buyer being able to secure the leases of the chain's 39 stores.
News of a conditional sale emerged last month with Pala saying he intended to keep the jobs of as many of the 122 staff as possible.
He was then waiting for all of the stores' landlords to confirm leases.
Pala is believed to be in the United States buying garments for his new chain of stores and could not be immediately reached for comment.
He had previously said staff at any stores where leases could not be renewed might be unlucky, "or we'll try and shift them where we can. But otherwise, the jobs are all secure".
Shareholders of the new Shanton holding company, called Shanton Fashions Limited, include Pala's co-owned company Pala Petrochem as well as Inderjit Luthera and Vijesh Bhagwan Nangia.
Pala and Luthera both have shareholdings in the Kiwi Institute of Training and Education on Auckland's Queen Street which specialises in teaching the English language, business and management courses.
Pala has other business interests, including a company involved in fabric.
Until the receivership, Shanton Apparel was majority-owned by Australian-based Atamine, with Carter Trading and Manukau-based Taca holding stakes.
Shanton Apparel also owns BBB Retail, which has 45 Bed, Bath and Beyond linen and homeware stores and which is not involved in the receivership.
The overall company had total revenue of $48.7m and made a net profit of $2.3m for the June 2011 year.
BBB Retail's accounts for the year to June 2011 show the company had total assets of $10.3m but liabilities of $13.5m and a $9.9m related-party loan to Shanton Apparel.
Shanton Apparel's shareholder equity was in the negative by $640,000, mainly from a $10.4m related-party loan to Shanton Properties (NZ) and accumulated losses.