Shares in Sunderland’s ScS have risen after the major shareholder which saved it from administration 12 years ago sold its remaining stake.
Parlour Products Holdings – an affiliate of US buyout specialist Sun Capital Partners – bought the sofa retailer for an undisclosed fee in 2008 following a pre-pack administration which saved hundreds of jobs and kept the business afloat.
At the time, ScS was struggling in a tumultuous retail sector and shares had been suspended from trading at 6.5p - but when the new purchasers stepped in CEO David Knight said the group felt “that Sun Capital Partners can help us go forward.”
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Since then, the sofa giant has returned to the Stock Exchange with a flotation in 2015, and its share price has risen steadily. Its last full year trading figures showing it increased its sales by £5m for the year ending July 2019, also showing it boosted its operating profit by around £300,000 to £13.9m.
Now Parlour Products Holdings has sold its remaining share holding of 9,853,024 ordinary shares, which represents approximately 25.92% of the ScS share capital – three months after it offloaded a further 15.5% of shares for £13.8m.
The most recent sale raised gross proceeds of approximately £21.68m and a stock market announcement this morning announced that, following completion of the placing, the seller no longer holds any shares in the company. Following the sale, shares in ScS rose 2.14% to £2.32.
Parlour Products announced it was selling the shares on the stock market late on Monday, saying the shares were offered by way of an accelerated bookbuild. Shore Capital Stockbrokers acted as sole bookrunner for Parlour Products in connection with the placing.
Paul Daccus, who was Parlour Products’ representative on the board, has resigned as a director following the sale.
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Sun Capital Partner’s share sell-off comes a month after David Knight, the group CEO who steered the firm back to form, announced he will retire from the Sunderland-based business in 12 months’ time after spending more than 30 years with the company.
Mr Knight’s departure announcement was made just over two years after fellow long-serving director, managing director Kevin Royal, announced he was leaving, after working at the company for 36 years, having first joined as a trainee store manager.
In its most recent trading update the business said like-for-like orders slipped 4.4% for the 26 weeks to January 25 2020, in line with the board’s expectations.
However, the firm said that the last nine weeks, which includes the key winter sales period, had seen like-for-like order intake growth of 1.2% when compared to the same period last year.
Mark Nicholson, investment associate at Newcastle based Vertem said: "The stock overhang (large equity holders looking to exit their positions) is now reduced so the marginal buyer of the stock can now be more assured that investment will not fall in value due to the sale of a large chunk of equity - a positive for potential investors.
"Furthermore, another large long term large investor, i.e. a pension fund, may have bought a large chunk of the placed stock, which would lend stability to the shareholder register."
A spokesman for ScS said: “There has been strong institutional investor demand for ScS and as a result Sun, which has until now been the private equity backer of ScS since 2008, has sold its remaining stake in an accelerated bookbuild announced first thing this morning.
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“From ScS viewpoint, the board thanks Sun European Partners LLP for their huge support over the past 12 years and welcomes the enlarged institutional shareholder base.”
Alan Smith, chairman of ScS, said: “Paul has been a director since the Company listed in 2015. Throughout that time, Paul’s advice, commitment and support has been greatly valued by the whole ScS team. The board will miss his contribution.”
David Knight, chief executive of ScS added: “On a personal note I would like to pass on my thanks to Paul and Sun European Partners, LLP for their huge support over the past 12 years.”