* Zolfo Cooper appointed administrators
* Zolfo Cooper: a number of stores likely need to be closed
* Clinton Cards says cannot repay 35 mln stg loan
* Debt was sold to new owner, supplier American Greetings
By Sarah Young and Paul Hoskins
LONDON, May 9 Clinton Cards became the
latest casualty on the British high street putting nearly 8,000
UK jobs at risk after its American supplier called time on its
Clinton Cards, which trades from 767 stores under the
Birthdays and Clinton Card brands, said on Wednesday it had
appointed administrators Zolfo Cooper because it could not repay
a 35 million pounds ($56.5 million) loan to its biggest supplier
The Essex-headquartered retailer was informed overnight that
its banks Barclays and Royal Bank of Scotland,
which had given it temporary waivers over the breaches, had sold
the loans to American Greetings.
American Greetings - which recently stopped shipping to
Clinton Cards - said apart from the secured debt, it had about
$25 million of unsecured exposure to the company, a majority of
which was now in default.
"There have been repeated discussions with Clinton Cards
since September 2011 concerning issues with our on-going
supplies to it," the U.S. firm said. "Despite this, Clinton
Cards has defaulted in respect of numerous payment obligations
under our supply arrangements."
The company added other suppliers had also stopped shipping
to Clinton Cards, given its financial difficulties.
Zolfo Cooper said they will continue to trade the business
while undertaking a "full marketing exercise" to find buyers for
all or parts of the group, while American Greetings said it
could ultimately participate in the ownership of Clinton Cards
or as a supplier to any buyer.
"It is likely that a number of stores will need to be closed
in order to make the business financially viable," it added.
Clinton Cards, which has said around half of its 8,000
employees work part-time, had warned on its outlook in March,
amid tough trading conditions, and as it battles intense
competition from supermarkets and the Internet.
British shoppers' disposable incomes have been squeezed by
rising prices, muted wage growth and government austerity
measures, hurting less diversified retailers like Clinton Cards,
and causing a growing number to fall by the wayside.
Analysts said the expected administration was a surprise,
however, as the supplier had enforced the loan.
"The supplier has pulled the rug, so it's by no means a
usual sequence of events. The question really is why the
supplier hasn't been more supportive," independent retail
analyst Nick Bubb told Reuters.
Both Barclays and RBS, 82 percent owned by the UK government
since a 2008 bailout, declined to comment when asked by Reuters
whether they knew before selling the loans to American Greetings
that it planned to enforce it.
Clinton Cards said that it had not been party to
negotiations leading up to the deal but that it had anticipated
American Greetings would extend the waivers granted by the banks
and start talks with a view to supporting it.
The firm said it had planned to restructure its business and
further details regarding its plans were due to be published in
the coming weeks following the completion of a strategic review
led by Chief Executive Darcy Wilson-Rymer, a former Starbucks
executive, who joined in October.
Shares in Clinton Cards, which have lost more than 80
percent of their value since the start of 2010, closed at 6.75
pence on Tuesday before being suspended from trading on
Wednesday, valuing the group at about 14 million pounds.