Overview
Olvera Consulting was engaged by Bicheno Investments Pty Ltd to advise on the acquisition and restructuring of Retail Adventures, a major discount variety retailer operating 420 stores under four brands. The engagement spanned from October 2012 to May 2013 and involved a complex insolvency process, including a Deed of Company Arrangement (DOCA) and a credit bid using secured intercompany debt.
Challenges
- Excessive store labour costs (17.8% of sales)
- Fragmented brand portfolio with four distinct cultures and customer bases
- Over 112 non-performing stores and an oversized distribution network
- High senior management turnover
- EBITDA loss of $28.4M in 2012
- Estimated $50M required for a solvent restructure to exit leases and manage redundancies
Turnaround Plan
- Developed a restructuring roadmap and operated the business under a court-approved licence during administration
- Advocated for and structured a DOCA to settle creditor claims
- Consolidated operations into two core brands
- Closed 220 underperforming stores and two distribution centres
- Reduced IT costs by 75% while maintaining 100% store uptime
- Lowered store wages to 14.3% of sales within three months
- Renegotiated supplier terms and managed rebranding under the Crazy Clark’s brand
- Executed a sale and purchase agreement using secured intercompany debt
Results
- Successfully acquired the business using non-cash consideration through secured debt
- Eliminated personal guarantees and senior secured liabilities
- Gained court approval for a licence to operate during administration
- Achieved creditor approval for the DOCA and completed the restructure
Key Drivers of Success
- Strategic use of intercompany secured debt for acquisition
- Effective consolidation and cost reduction across operations
- Strong stakeholder negotiation and creditor engagement
- Seamless operational continuity during administration
Key Takeaway
A well-executed insolvency strategy, leveraging secured debt and operational restructuring, can enable the successful acquisition and revival of a distressed retail business — while preserving value and minimising disruption.
