Electrical good retailers Comet is to be sold to a private equity firm for just £2.
Anglo-French firm Kesa, which owns Comet, is selling it to a group of companies under the name "Hailey" who are advised by retailer turnaround specialists OpCapita.
Kesa said the sale was a better option than continuing with its own turnaround plan for Comet.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
"In reaching its view the Board took into account the ongoing negative impact of Comet on the financial position of the group, the significant challenge involved in achieving an acceptable level of profitability at Comet over the long term given the specific competitive nature of the UK market, and the substantial costs involved if the turnaround plan proved to be unsuccessful," Kesa said.
Kesa will put £50m into the new holding company, and will retain liability for the Comet employees' final salary pension scheme.
Kesa said it would benefit from any subsequent onward sale of the chain, but only if the resale price was greater than £70m.
The deal is subject to shareholders approval. Shares in Kesa fell almost 4% following the announcement but it was unclear whether this was as a result of the deal or because of ongoing crisis in the eurozone.
-
Thousands of Neil Woodford investors sue Hargreaves LansdownMore than 5,000 people who invested in Woodford's collapsed equity income product are taking Hargreaves Lansdown to court
-
Is now a good time to invest in gold?In the current market conditions, is gold a good investment? We explore the reasons why now might be a good time to put some money into gold.
