Money Godfreys surrenders to 99-year-old co-founder's takeover bid

14:31  09 may  2018
14:31  09 may  2018 Source:   smh.com.au

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The 99 - year - old co - founder of vacuum cleaner business Godfreys Group has launched a bid to buy back the struggling business and take it private. John Johnston — who founded Godfreys in the 1930 s with Godfrey Cohen — has launched a 32

Money Finance News Godfreys ’ 99 - year - old founder launches takeover bid for struggling vacuum maker. Struggling vacuum cleaner merchant Godfreys is assessing the million takeover bid by its 99 - year - old co - founder .

Godfreys says shareholders should accept the offer.© Rob Carew Godfreys says shareholders should accept the offer.

Vacuum cleaner chain Godfreys has told shareholders to accept a takeover bid made by the company's 99-year-old co-founder after suffering a devastating 27 per cent fall in sales in the past two weeks.

John Johnston, who joined Godfreys as a partner in 1936 and owns 28 per cent of the company, lobbed a 32¢ a share bid for the stock he does not already own in early April.

Godfreys floated on the ASX at $2.75 per share in 2014 but has been hammered by competition from the likes of JB Hi-Fi and Harvey Norman.

The company, which has about 220 stores across the Australia and New Zealand, on Wednesday said that its independent directors had reviewed the offer and recommended that shareholders accept Mr Johnston's offer.

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SHARES in Godfreys have soared on news the struggling vacuum cleaner retailer is considering a million takeover bid by its 99 - year - old co - founder .

John Johnston, the 99 - year old co - founder of the vacuum cleaner chain launched a takeover bid yesterday, offering shareholders

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Godfreys ’ shares were up more than 40 per cent in early trade, still only back to where they were in early March. Shares in Godfreys have soared on news the struggling vacuum cleaner retailer is considering a million takeover bid by its 99 - year - old co - founder .

Ironic? The shares in Godfreys , the embattled vacuum cleaner retailer closed at an all time low of 21 cents on Monday at 4pm, and an hour and 17 minutes later the 99 - year - old co - founder and still major shareholder revealed plans to make a takeover bid for the entire company and take it private.

.32 cash for each Godfreys share they hold.

Godfreys' chairman Brendan Fleiter said a takeover was the best option considering the uncertain outcome of the business' turnaround plan, and the fact it was on track to breach its covenants on a $30 million debt owed to Mr Johnston.

"While good progress has been made... there is no guarantee as to the benefits that theturnaround strategy will realise, nor the time required to realise these benefits," Mr Fleiter said.

While Mr Johnston had agreed to waive the fixed cover charge ratio covenant on its debt, which Godfreys expects to breach, the waiver was on the condition that the company held "negotiations" with Mr Johnston about "debt reduction strategies" no later than this Friday.

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The founder of Godfreys Group, John Johnston, hopes to buy back the struggling retailer. (AAP). Struggling vacuum cleaner retailer Godfreys is assessing the million takeover bid by 99 - year - old co - founder John Johnston.

Godfreys Group shares jumped nearly 43% to 30 cents yesterday after investors noted the mop up bid (a ‘charity offer’?) if the embattled company’ s biggest shareholder, John Johnson, the 99 year old co - founder of the vacuum cleaner retailer.

John Johnston already owns 28 per cent of Godfreys.© Supplied John Johnston already owns 28 per cent of Godfreys. That would include possibly swapping the debt for greater ownership of the company, Mr Fleiter said.

Godfreys said on Wednesday it expected to breach its leverage and fixed cover ratio covenants due to thumping 27 per cent fall in comparable sales in the past two weeks.

This came after an already poor April, and contributed to an 8 per cent fall in comparable sales for the year to date.

The company blamed this on changing its television advertising in April and May from being focused on discounts and sales to focusing on product features. This did not work, and it has since reverted to the old ads, Godfreys said.

Underlying earnings for the full financial year would come in at about $3.5 million, or possibly worse if sales deteriorated further.

Godfreys reported a $58.6 million bottom line half-year loss, driven by a $75 million write down. It reported a full year loss of $18.4 million in 2017.

Gofreys' shares were down 1.6 per cent at 29.5¢ by midday.

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