Allders pension poison pill

More than 15 potential bidders are poring over UK department store retailer Allders, which is creaking under debt of about £150m.

Restructuring adviser Kroll took control of the business on January 28 and is understood to be looking for a quick sale. Alchemy, the private equity firm run by Jon Moulton, may be among the parties with ideas for the 45-strong chain. Debenhams and House of Fraser are also understood to be interested in taking over some of the stores.

The most pressing issue for suitors is Allders’ pension scheme, which could balloon to anywhere from £10m to £75m. Sources close to the situation said it might be possible to broker a deal where the new owners did not have to take on the full liabilities, however.

There are 3,200 members of the pension scheme, including 560 already drawing a pension. The Minerva property group, which had a 60% stake in the chain, denied it had liability for the funding gap, but might face a legal challenge on the issue.

Hilco, a US turnaround firm, is advising Kroll on management of the stores. It also leads Epsilon Investments, which became Allders’ biggest creditor after buying a chunk of debt from Lehman at the heavily distressed price of £26m.

Property company Minerva, which led a consortium that bought 60% of Allders last year, has abandoned plans for its own auction. Quinlan Private was looking at the business during the six-month auction process. Management was looking to sell for around £600m, but bids had fallen way short of that level.