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DSE New Zealand loss of around $100 million expected

08 Mar 16

Dick Smith Electronic’s New Zealand operations has an estimated net loss of nearly $100 million according to the first report from receivers Ferrier Hodgson.

The report shows an estimated net loss of $97.8 million before costs of realisations. That estimated loss is book value, with the real loss likely to be even higher, with full book price unlikely to be realised and costs for the selling of assets not factored in yet.

The report doesn’t provide any figures for the estimated total realisation, which are deemed ‘commercially sensitive’.

That loss means even secured creditors are unlikely to receive full repayment, with an estimated shortfall of $75 million for priority and secured creditors, before costs of realisation. 

Included among the secured creditors are Apple Sales NZ, Acer, Hewlett Packard NZ,  Spark, Toshiba and Vodafone, along with distributors Ingram Micro and Synnex.

Meanwhile, unsecured creditors are owed a further $22.8 million, which includes $11.2 million to parent company Dick Smith Holdings.

Dick Smith Holdings and its associated parties were placed in administration and receivership in early January.

In late February, Ferrier Hodgson announced all Dick Smith and Move stores across Australia and New Zealand, with the exception of four Move stores at Sydney Airport, would close after the company failed to find a buyer for the businesses.

Last Friday the axe was swung on the Move airport stores as well, with the immediate closure of the stores after they too failed to attract a suitable buyer.

The first report for Dick Smith Electronics New Zealand operations show an estimated net loss before costs of realisation of $130.8 million, with $64.8 million in estimated assets, including cash, receivables and inventory, which was estimated at $32.9 million book value when the receivers were appointed in January.

The report shows priority claims of $3.4 million, with employees owed $825,962, and Inland Revenue owed $2.7 million.

Claims from secured creditors stand at $136.4 million, including $130.8 million to syndicated lenders and $5.6 million to other secured creditors. Those figures mean an estimated deficiency of $75 million to priority and secured creditors. 

The report notes that while the net book value of plant and equipment is $5.9 million, no items have yet been disposed of.

The company’s bank accounts included $2.2 million, with point of sale floats around New Zealand amounting to $55,650, while $739,849 of cash was in transit, including outstanding deposits and EFT settlements.

In January, receiver James Stewart said the New Zealand business was profitable and was expected to be ‘attractive’ to potential buyers.

The company began its New Zealand operations in 1981 and had 62 stores when it went into receivership.

The receivers report notes that while ‘orderly’ store closures will ‘shortly commence’ with all 62 New Zealand stores expected to be closed within seven weeks, no completion data for the receivership has been estimated.

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