Electronics reseller Dick Smith has submitted to voluntary administration.
The public company made the announcement this morning to the Australian Securities Exchange, citing the pressure to attain short term funding as a major factor in its decision.
“Whilst confident on the long-term viability of the company, the directors have been unsuccessful in obtaining the necessary support of its banking syndicate to see it through this period,” said Dick Smith Holdings chairman Rob Murray.
“The directors are of the view that without this support, there is no option other than to appoint a voluntary administrator.”
McGrathNicol has been appointed as administrator. Murray said that Dick Smith management would work with McGrathNicol to try to keep the business operating.
“The directors formed the view that any success in obtaining alternative funding would not have been sufficiently timely to support short-term funding requirements and allow the company to order required inventory during the next four to six weeks,” Murray said.
He added that the board believed the voluntary administration as the “best way to protect the interests of shareholders, creditors, employees, suppliers and other stakeholders”.
Disappointing sales at Dick Smith became apparent at the start of December when the chain copped a $60 million write-down on inventory. The company subsequently ran a clearance sale during the month to turn around its fortunes, but the move failed to satisfy its critics.
Dick Smith Holdings' share price is now at 35.5 cents - a stark contrast from $2 in August. This time last year the company was celebrating a $56.8 million year-on-year increase in revenue to hit $693.8 million for the half-year to 31 December 2014, with net profit up $25 million to $25.2 million.