Unwins PE owner to begin legal proceedings

A UK private equity group is considering legal action against the previous shareholders of the UK off-licence chain Unwins.

DM Private Equity (DMPE), a UK private equity house, is considering suing the former owners, auditors and shareholders of UK off-licence chain Unwins, the company it acquired in March.

KPMG was appointed as administrator to Unwins on Monday as the company closed the majority of its stores and made almost all of its employees redundant following an unsuccessful attempt to find a buyer.

London-based DMPE paid £32 million (€47 million; $54 million) in March 2005 to acquire the southern England-based Unwins from the Weitz family. Shortly afterwards, DMPE is reported to have completed a sale and leaseback of Unwins’ freehold stores, enabling it recoup much of the original acquisition price.

A statement from DMPE said: “DM Private Equity…announces that it intends to commence legal action to seek full restitution and damages resulting from its acquisition of The Unwins Wine Group Limited and its subsidiaries. DMPE has issued instructions to its solicitors to pursue all available remedies against: 1. The former directors of Unwins; 2. The auditors of Unwins [Grant Thornton]; 3. All 84 shareholders of Unwins.”

The statement continued that completion accounts signed off in early December 2005 had established that “as of the date of acquisition by DMPE, Unwins effectively had a net asset deficiency of approximately £1.3 million as compared with the warranted net asset value of the date of acquisition of £9.5 million”.

In effect, said DMPE, there was a deficiency of £3.7 million which represents a variance of £13.2 million compared to the warranted net asset value of £9.5 million.

Myles Halley of KPMG Corporate Recovery said in a statement that Unwins had been hit by difficult market conditions. “Unwins has suffered, like other off-licence chains, from increased competition from supermarkets and tight margins. The directors have tried unsuccessfully to restructure or sell the business and it is evident that this company is making excessive losses and has no stock to continue to trade.”