Home news 4,000 P&H staff wait anxiously for rescue deal

4,000 P&H staff wait anxiously for rescue deal


Thousands of workers at Britain’s biggest tobacco supplier were facing an anxious wait for news on Wednesday night about a rescue deal aimed at safeguarding the company’s future.

Sky News has learnt that talks about a takeover of Palmer & Harvey (P&H), which supplies every Tesco outlet in the UK, remained in the balance amid an increasingly urgent need for new investment.

Sources said that Carlyle, the private equity firm, hoped to secure confirmation of a period of exclusive talks with P&H ahead of an announcement on Thursday.
Advisers to a range of stakeholders, including two of the world’s biggest cigarette manufacturers, said are understood to be locked in talks at the London offices of the law firm Ashurst in a bid to thrash out a deal.
If a deal cannot be finalised before the end of the week, sources warned there was a risk that P&H could fall into administration.
Such an outcome would have potentially serious consequences for approximately 4,000 people who work for the company, as well as the supply chains of some of Britain’s biggest grocery retailers.
Lenders to P&H and creditors such as Imperial Tobacco and Japan Tobacco International (JTI) could lose huge sums if administrators are called in, although many of them are likely to take a haircut on the money they are owed even if a sale to Carlyle takes place.
Talks about the future of P&H have been under way for most of the last year, but have intensified since Tesco announced a shock £3.7bn takeover of the wholesaler Booker in January.
Sky News revealed this week that James Lancaster, a co-founder of the convenience retailer McColl’s, has been lined up by Carlyle to become P&H’s chairman if it does clinch a deal.
A deal would be likely to involve Tesco agreeing to an extension of an existing supply deal to as long as five years.

P&H is the biggest tobacco distributor in Britain, supplying roughly 90,000 retail outlets across Britain with cigarettes, confectionery and other grocery products.
As part of the prospective deal with Carlyle, Imperial and JTI – which own brands such as Lambert & Butler and Silk Cut – would roll over roughly £60m of outstanding loans to P&H.
The precarious finances of P&H have caused alarm at some of the UK’s largest retailers and tobacco groups because of the integral role it plays in their supply chains.
Lenders to the company, which include Barclays and Royal Bank of Scotland, had also become increasingly anxious about the potential ramifications of the Booker takeover.
An earlier refinancing of the delivered wholesaler was only concluded a few months ago, alongside an 18-month extension to its supply agreement with Tesco, which accounts for roughly 40% of P&H’s revenues.
P&H is one of the UK’s biggest private companies by sales, and among the largest to be owned by current and former employees.
The existing shareholders are unlikely to receive anything other than a modest payment for their interests in P&H, which was established in 1925 as a tobacco and sweets wholesaler.
The company is run by Tony Reed, a former boss of Tesco’s convenience retailing business, who is thought to be likely to remain in place if the Carlyle deal is finalised.
P&H and Carlyle declined to comment on Wednesday night.

Source: SKY