Carlyle had signed a heads of terms and memorandum of understanding to acquire P&H – which counts UK supermarket chain Tesco as one of its biggest clients – following a competitive sale process in the summer. The deal was not done by the time the private equity firm’s exclusivity ran out at the end of November, with the company’s liquidity crisis giving it no other option than to call in the administrator.
The Ashurst team is led by Giles Boothman, global head of restructuring and special situations, and also includes banking partner Jane Fissenden. Restructuring partner Deborah Gregor is leading the Hogan Lovells team, which is acting for both PwC and P&H’s lending banks.
Allen & Overy is advising Imperial Tobacco as one of the largest trade creditors to P&H. Slaughter and May is acting for the other major trade creditor, Japan Tobacco International (JTI). P&H had tried to address its liquidity issues in April when trade debt owed to Imperial and JTI was converted into senior secured long-tenor debt.
The company was also hit by Tesco’s proposed £3.7bn takeover of rival tobacco supplier Booker, which shrouded the future of P&H’s relationship with its biggest customer in doubt. That deal was given the provisional go-ahead in mid-November by the Competition and Markets Authority (CMA).
‘P&H had been facing a number of systematic issues in which the company was caught between powerful tobacco manufacturers and retail giants, a position which was not sustainable in the face of severely squeezed margins’, one industry source said.
PwC’s Matthew Callaghan, Ian Green and Zelf Hussein are the joint administrators. Callaghan, joint administrator and partner at PwC, said: ‘The P&H Group has faced a challenging trading environment, and the need for significant restructuring has been recognised for some while. The company has insufficient cash resources to continue to trade beyond the short term and the directors have concluded that there is no longer any reasonable prospect of a sale. Therefore, the directors have had no choice but to appoint administrators’.
The P&H Group employed around 3,400 employees, of which roughly 2,500 have immediately been made redundant.