Unbound shares tank as group pulls sale after no offers emerge

Shares in Hotter Shoes owner Unbound Group tanked on Tuesday after the company said it had taken itself off the market after receiving no buyout offers.

The company said it was now looking at a potential fund raise of £1.5m - £2m to support "a formal restructuring plan, with a view to securing a better outcome for the group".

It warned that revenues continue to be impacted by liquidity constraints and was still relying on the waiver of loan covenants from its banks.

Unbound in May put itself up for sale as it warned it could struggle to pay its upcoming bills, and appointed Interpath Advisory to act as joint financial adviser alongside Singer Capital Markets Advisory LLP to manage a strategic review and formal sale process.

The move came after the group missed out on a planned £10m investment from Marwyn Investment Management, which fell through on the back of poor trading. Unbound had also turned its back on a potential deal with WoolOvers Group valuing the business at £6.8m before Marywn expressed an interest,

In its latest filing to the London Stock Exchange, the group remained positive on its current prospects, saying the profitability of the business in recent months had been in line with expectations.

"The positive impact on the profitability of the group of the implemented cost reduction measures is now becoming increasingly evident in its financial performance."

"In the first four months of the current financial year, the group's fixed cost base has been reduced by 9% year-on-year, with this saving expected to increase as additional cost reduction actions take effect."

It added that group core earnings for April and May combined came in at £1.1m after the seasonally loss-making months of February and March. Margins were up to 14% from 9% a year earlier.

"For the first four months of the financial year, the group is at EBITDA breakeven," Unbound said.

Reporting by Frank Prenesti for Sharecast.com