Veritas Investments will wind up its unprofitable Nosh supermarket business to keep in the good graces of its lender, ANZ Bank New Zealand.
The Auckland-based company has until January 15 to advise an unconditional sale of Nosh and, given the uncertainty of finding a buyer, Veritas's board has decided to look at closing Nosh by March 31, it said in a statement. The company had been looking at ways to improve the performance of the Nosh stores, with sale or closure as part of its revised banking facility agreement in October.
"The sale or closure of the loss-making Nosh business would result in non-cash asset write-downs and one-off expenditure related to the sale or closure, although the amount of that expenditure cannot be quantified at this stage," chairman Tim Cook said. "From a go-forward perspective, although the sale or closure of Nosh will result in lower revenue for the group, it is likely to have a positive effect on the group's overall earnings."
Veritas took on a $5 million funding line with ANZ to buy the Nosh stores in 2014, but has struggled to turn the gourmet supermarkets into a profitable business. It had set out plans to franchise the business in recent months.
The food and beverage investor renegotiated its banking arrangements in October to reduce its repayments and reschedule its debt, as its Mad Butcher and Nosh businesses weighed on the group.
