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19 July 2007 | Homebuy rescued from administration


Homebuy, a leading national supplier of electrical and household goods that reached a market capitalisation of more than £100 million before plummeting into administration, is back in business following a £22 million management buyout.

The deal was supported by substantial investment from Endless LLP, the buyout and turnaround fund, and Landsbanki Commercial Finance. The buyout, which was arranged by corporate finance advisers Orbis Partners, means that Homebuy will recommence trading immediately, saving 400 jobs.

The agreement sees the re-emergence of a substantial, profitable and growing business serving approximately 60,000 households, with a workforce of 400 people and annual turnover of £35 million. The Walsall headquarters is supported by a national distribution centre in Manchester and a further eight service depots around the UK - in Belfast, Chester Le Street, Dundee, Glasgow, Rotherham, Sevenoaks, Walsall and Wigan.

Homebuy is a leading supplier of electrical products, household goods and cash loans using personal credit facilities. Customers pay home-visit collectors every four weeks from a coin meter attached to their televisions. Formed in 2003, Homebuy Group floated on the AIM market of the London Stock Exchange in April 2004, subsequently acquired Telebank and invested heavily in new channels, diversifying into retail stores. The company was considered a star performer, reaching a market valuation of more than £100 million. However, Administrators were appointed to Homebuy in September 2006 after a fall in cash collection combined with spiralling costs to force the company quickly into insolvency.

The new management team, led by the Managing Director Phil Goad and Steven Banks, Finance Director, has developed a robust business plan focused on supporting its approximately 60,000 loyal existing customers. With the backing of Endless, the company is poised for a return to growth through providing high-quality products and loan services to the sub-prime market place.

Nick Leitch, Investment Director of Endless, said: "Our investment alongside management will preserve employment and reinvigorate the business. This is the first of many investments we will deliver in the Midlands and I am delighted that it s such a significant transaction. Turnaround is a challenging market and needs the right combination of timely funding, support and expertise."

James Grenfell at Orbis Partners said: "There's been significant negative press directed at the private equity industry and this deal demonstrates how a supportive and proactive equity investor can secure the future of a business and its workforce. Endless were quick to recognise the opportunity and commit considerable resource, expertise and speed to completing the deal."

Phil Goad said: "The Homebuy management team and staff have collectively been working hard to maintain what we have always known to be an excellent business and deliver this deal. We were especially impressed by the ability of the Birmingham-based funders and advisers to act quickly and commercially in providing advice, support and funding. Having such expertise on the ground here in the Midlands was vital in getting the right deal and achieving success."

Paul Hayward and Tom Durrant of HBJ Gateley Wareing advised Endless while Graham Muth and Mark Gibson of Cobbetts advised the management team.

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