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Palmer & Harvey in Refinancing Talks

Sky News reported on Monday 20th March that Palmer & Harvey (P&H) are in talks with a number of entities and stakeholders about refinancing the business. These include two major tobacco suppliers Japan Tobacco International (JTI) and Imperial Brands. Sky News reports that they are considering pumping tens of millions of pounds into P&H in return for an equity stake.

P&H is one of the industry’s leading wholesalers with annual revenues of over £4 billion. They supply over 90,000 outlets and have over 1,300 vehicles.  Besides serving thousands of independent store outlets, P&H supplies Tesco, Sainsbury’s, Wm Morrison’s fuel outlets and Conviviality Retail stores.

Tesco accounts for over 40% of their revenues and it is being speculated that the planned Tesco/Booker merger has given the P&H refinancing talks more urgency. If Tesco moves a percentage or all of its tobacco business to Booker the impact on P&Hs finances could be damaging and significant.

Both the wholesale industry and the independent convenience channel needs a healthy and robust P&H for reasons of choice and effective market competition. If P&H were to fail for any reason the effect on the wider industry would be far-reaching and profound. The concern regarding refinancing by its suppliers revolves around conflict of interest and terms of trade. Would P&H be unfairly advantaged?

Store Excel would be interested to hear members’ views about the P&H situation. Please let us know on the discussion forum.

 

David Gilroy

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