Evans Cycles’ administrators advised that “almost all” of its stores were profitable before the company went into administration, but new owner Mike Ashley plans to close around half of the shops.
The man behind Sports Direct warned that stores would have to close to save the 1921 founded business, which had sought a £10 million cash injection to stay afloat.
“We are pleased to have rescued the Evans Cycles brand,” Ashley commented.
“However, in order to save the business we only believe we will be able to keep 50 per cent of stores open in future.
“Unfortunately some stores will have to close,” he added.
The Telegraph newspaper has reported that administrators Pricewaterhouse Coopers (PwC) said in its proposals document that the company was “burdened” by head office costs.
The business employs around 1,300 staff and has its headquarters in Gatwick. Its debts racked up to a reported £85 million.
Secured lenders HSBC and AIB are said to be owed £28 million, and private equity owed £33 million.
Unsecured creditors such as suppliers – including Specialized and Trek – were owed £24 million, according to reports in The Telegraph newspaper.
It is suggested that they can expect to receive 2.5p for every £1 owed.
Previous owners – the private equity firm ECI Partners – bought Evans Cycles from Active Private Equity in 2015.
In September this year, Evans revealed that it required a £10million investment, and Sports Direct eventually announced its offer after a selection of companies – including competitors Halfords – were named as interested parties.
Partner and joint administrator for Evans, Matt Callaghan from PwC, said after the deal was announced: “2018 has been a very difficult trading year for the business, in part due to the impact of the extended winter weather in the early part of the year and a lack of cash to invest in stores and develop the online platform.”