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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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, the 99 - year - old co - founder of Godfreys gained control of the stricken vacuum cleaner retailer on Friday, after major shareholders signalled they would sell into his higher takeover offer.

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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In May, the 99 - year - old won over two major shareholders who agreed to sell their stakes to him after he increased his bid for the struggling company to .7 www.news.com.au/finance/business/breaking-news/ godfreys - founder -gifted-with- takeover /news-story/db2cb466dfce0223be927615fa844080.

The 99 - year - old co - founder of Godfreys is set to take control of the struggling vacuum cleaner retailer after two major shareholders agreed to sell their stakes to him. John Johnston, who co-founded Godfreys in Melbourne in 1936, won over the shareholders after his

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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Godfreys founder John Johnston will be gifted with the takeover of the vacuum cleaner retailer ahead of his 100th birthday, after In May, the 99 - year - old won over two major shareholders who agreed to sell their stakes to him after he increased his bid for the struggling company to .7 million, from

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

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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