Woolworths

Woolworths PLC needed to renew its loan facilities and, as part of the application for an asset-based facility, the Client engaged Gordon Brothers to conduct a comprehensive inventory and commercial valuation of its major retail and wholesale assets.  As well as 819 stores, Woolworths also owned the market-leading UK wholesale distributor of CD’s, DVD’s, Games Software and Books, Entertainment UK.

The most important factor in such an appraisal is the Net Orderly Liquidation Value, (“NOLV”) – the value that Gordon Brothers would expect to recover in the event that a business was to go into administration.  Much of the input for this was derived from an in-depth analysis of stock and sales data files, carried out by Gordon Brothers’ Finance Team.  The report included a detailed analysis of the stock and sales for each product category in the business.

Since data files rarely tell the whole story, and to truly underpin the final NOLV, Gordon Brothers’ Operations and Supply Chain Team conducted a significant number of field visits to stores and distribution centres, to view the stock physically and to help evaluate the likely recoverable values.  Both the stores and distribution centres were described in separate sections of the report.

To support the analyses, Gordon Brothers also met and interviewed the senior management team of the Group, to assess the current and future issues and planned developments of the businesses.  These meetings formed much of the basis of the section of the report dealing with the company.

Finally, it was necessary to view the assets in context, so Gordon Brothers conducted a detailed market research and competitive analysis exercise and included a further section dealing with current and future market conditions in the product areas and sectors in which the business was operating.

As a final step in securing the loan facilities from a syndicate of worldwide lenders, Gordon Brothers participated in both face-to-face and telephone question and answer sessions.

The appraisal was delivered to an incredibly demanding timescale and contributed to the Company receiving the largest asset-based loan ever made in Europe.  Both the Company and the lending syndicate were so pleased with the quality and content of the report that they subsequently retained Gordon Brothers to conduct the annual follow-up appraisals going forward.

Nigel Smith, Associate Partner, KPMG, said, “Woolworths appointed Gordon Brothers to undertake an in-depth analysis and valuation of the group’s asset base, which supported the Woolworths’ refinancing in January 2008.  Gordon Brothers’ analysis was delivered under strict time pressures and was critically reviewed by the lenders who agreed to provide facilities in excess of £350m.”  Nigel added, “It was a pleasure to work with Steve and his team, and we hope there will be opportunities to work together in the future.”