Unbound terminates sale process and explores financial restructure

Unbound, parent company of Hotter Shoes, has formally terminated its sale process having received no offers "considered capable of receiving shareholder and wider stakeholder support", and is now exploring a financial restructure and fundraising process.

In an update to markets today, the company said that advisers from Interpath continued to run the strategic review process for the group's main operating subsidiary. Offers within this process continue to be received and reviewed, however, these offers may result in little or no recovery of value for the company's existing shareholders, it said.

Encouraged by recent positive trading, the company said it was now assessing the feasibility of an equity fundraise of between £1.5 million and £2 million to "support implementation of a formal restructuring plan".

The Unbound board, in conjunction with Singer Capital Markets, is engaging with some of the group's major shareholders and has received "some positive feedback" at this early stage, with a view to procuring broader participation in the equity fundraise. Its implementation would be subject to the consent of the company's shareholders and wider stakeholders before ultimately requiring the sanctioning of the UK Courts. At this stage there is no certainty such an arrangement will go ahead.

Unbound said it had been encouraged that the profitability of the business in recent months and that trading had been in line with the board's expectations but its revenues continue to be impacted by liquidity constraints. It has reduced its fixed cost base by 9% with this saving expected to increase as additional cost reduction actions take effect.

Following the seasonally loss-making months of February and March, the group generated unaudited EBITDA (pre-IFRS 16) of approximately £1.1 million for April and May combined, an EBITDA margin of 14%, an improvement from 9% in the prior year period. For the first four months of the financial year, the Group is at EBITDA breakeven.

Unbound kicked off a sale process in May after failing to secure additional funding – a potential £10m buy-out by the WoolOvers Group had fallen through – to complete its restructuring. It also revealed that at that time it had experienced worsening trading conditions.

Unbound also said at the time that it would pause activity on its newly launched multi-brand e-commerce platform, dedicated to the 50-plus consumer, and focus on its core comfort footwear brand Hotter.

Hotter had previously entered into a CVA during the pandemic in 2020, resulting in the permanent closure of 46 stores. It was left with 17 standalone stores and around 10 concessions in garden centres.