The parent company of Wiggle Chain Reaction Cycles (CRC) has hit further financial trouble as €150m of financing from its parent company was withdrawn.
Signa Sports United (SSU) , the parent company of Wiggle CRC and a host of other retail websites, announced today that its own parent Signa Holding had terminated its commitment to provide equity to the company.
In a statement SSU added that it had relied upon that commitment to “draw funds to meet its near-term obligations and for its going concern assessment”. The statement did not make it clear how it intended to continue operating without the financing.
The firm explained that the two companies had entered a “binding equity commitment” on 26 June this year. That agreement was said to have included “unconditional commitments” from Signa Holding to provide SSU with €150m (£130m) of liquidity financing between September 1 this year and September 30 2025.
It also said there was a supplementary agreement in September to “cover the operational financing of Signa Sports” and “secure it as a going concern”.
But today Signa Holdings notified SSU it would terminate its commitment.
Perhaps unsurprisingly, SSU said the withdrawal of the financing was unjustified and that it would “take the appropriate legal steps” to secure the interests of its shareholders, creditors and employees.
It added that currently €143m of the financing remained undrawn.
Cycling Weekly has approached Signa Holdings for comment but had not yet heard back at the time of going to press.
This is just the latest financial blow to the cycling mega-retailer's parent company.
Last week CW reported the firm was suffering “'severe liquidity challenges” and that it would restructure and delist from the New York stock exchange.
As a result, SSU said that it would begin a review of its operating model, which it says will include the “termination or winding down of non-performing assets”, while noting that it's bike segment had "continued to lag management expectations" of financial performance.
“As the company enters FY24, it is the belief of SSU management that the market disruptions associated with market overstock are likely to persist into late FY24 and will adversely impact the company’s ability to achieve its near-term growth and profitability targets.”
In August this year, Cycling Weekly reported that Wiggle Chain Reaction Cycles recorded a pre-tax loss of over £97million in the year to 30 September 2022.
Thank you for reading 20 articles this month* Join now for unlimited access
Enjoy your first month for just £1 / $1 / €1
*Read 5 free articles per month without a subscription
Join now for unlimited access
Try first month for just £1 / $1 / €1