Wickes Home Improvement Stores Hit by Recession

By | May 11, 2009

Reports have recently revealed that the company behind UK Wickes home improvement stores, Travis Perkins Plc is trying to find £300 million in order to get rid of debt. The business, which supplies bricks and tiles to construction companies and the public, has been badly affected by the downturn in the housing markets and this has prompted it to appeal to investors.

Travis Perkins Plc, owner of Wickes, is based in Northampton and sent out requests for aid to its investors this month as it intends to sell in the region of 86 million of its shares before the year ends. Each share will be priced at £3.65 and that’s a full 52% lower than the price which Travis Perkins Plc closed at in May this year.

The company’s Chief Executive, Geoffrey Cooper, is thought to be worried about defying banking rules and it has been suggested that he is looking for new investment funds to strengthen the company within banking guidelines. The sale of its shares is underwritten by several companies including Tricorn, HSBC Holdings and Citigroup.

It’s understood that the share sales will take place to bring the company in line with laws which it is close to breaking. The laws govern the borrowing power of companies like Travis Perkins which is close to breaking contract by borrowing 3.5 its annual earnings. According to one financial analyst named Flor O’Donogue estimated earnings for the company are in the region of 210 million pounds a year, whilst the debt is 3.9 times this, at £823 million.

In order to save money over the past two years Travis Perkins Plc has laid off in the region of 12% of its workers. This is largely a result of the slump in the construction and home improvement markets due to the associated dip in housing markets.