ModelZone, a toy maker and retailer it purchased in 2009, is about to close all the stores it still has in operation, according to a statement released Deloitte, its administrators. The decision will impact a total of 18 stores and lead to 126 job losses.
It remains unclear how much LDC stands to lose in the process.
LDC declined to comment, while Deloitte told Private Equity International that the decision’s impact on shareholders and creditors was still being worked out.
ModelZone was the UK's
LDC first invested in the company in 2009, backing a £5.6 million management buyout that comprised the group’s retail operations as well as Amerang, its wholesale business. The ambition stated then was to support an “accelerated rollout plan” across the country, in parallel to several bolt-on acquisitions.
But the company soon faced significant headwinds, Richard Hawes, joint administrator and partner in Deloitte’s restructuring services practice, explained in a statement. “Modelzone has been generating losses over the past few years, largely through an increase in online competition and having taken leases on new stores that proved to be unprofitable.”
The company went into administration in June 2013, at which time it had 47 stores and 358 staff. Having received no buying offers for the business, its administrators decided to implement a store closure programme, eventually leading them to fold the entire business.
ModelZone is the latest casualty of the difficulties affecting the UK’s high street retailers, which have suffered from a mix of macroeconomic concerns, less income available for discretionary spending and a move to online shopping. Earlier high-profile retailers to fall down have included music shops HMV, photo camera retailer Jessops, DVD rental business Blockbuster, furniture chain Dwell and fashion brand Nicole Farhi.
The news comes at a time of heightened activity for LDC. The firm, which receives the entirety of its equity financing from Lloyds, has sealed 12 deals so far this year – on good track to equal the 18 transactions completed during the whole of 2012.