Following days of discussion, this morning the first consignments of books left EUK's warehouse since Woolworths called in the administrators. More will go out tonight and tomorrow, which should ensure that supermarket shelves are stacked ready for the busy shopping weekend. Ian Hudson, Random House Deputy CEO and, in his role as Publishers Association President, leader of discussions between the parties involved, told BookBrunch that publishers would be paid for those books that are shipped out of the warehouse. Terms are 'realistic... It's a good offer', Hudson explained, though he declined to be drawn further. While publishers and retailers will be breathing easier today, there is a great deal more still to be done.
'The next challenge is resupply' - meaning publishers' delivery of new consignments of books to EUK. Here, however, publishers have the upper hand, for EUK urgently needs new stock if it is to trade through to Christmas or however long it takes administrator Deloitte to find a buyer; thus the distributor is not in a strong bargaining position. 'What we're doing now eases the problem, it doesn't solve it,' Hudson continued. 'If there is no supply, EUK goes down.' And, clearly, neither side will want that to happen.
For the moment, however, the administrator will be talking to CD, DVD and games suppliers in order to get those shelves restocked as well. That is more of a challenge, because, unlike publishing, it is not a 'cohesive' industry. Publishers' ability to unite during the crisis helped the book trade - and also helped the administrators, allowing them to deal with publishers as a body, a stance that enabled them to 'jump the queue, as we could be dealt with easily'. Hudson praised the hard work of all those concerned.
As to Bertrams, Hudson stressed that in dealing with Deloitte, the major players had acted 'not simply as publishers but as distributors on behalf of all our clients'. TBS/GBS alone has around 75 client publishers. The aim has been to minimise exposure but, again, to keep the supply lines open - a course of action he commends to distributors including NBNI, whose members are understandably very concerned about the potential risks and who 'should have the same discussions we had'. Again, he would not be drawn on terms, but BookBrunch understands that Bertrams is being supplied on a pro forma basis.
In common with most of the trade, Hudson believes that Bertrams has 'a good chance of emerging from this healthy', though whether that is through a sale to a Continental buyer or perhaps to Ingram in the US (as outlined on BookBrunch earlier in the week), or through an MBO, he is no clearer than anyone else. The current management team is liked and respected, so an MBO would surely be welcomed - if management has the stomach for it and if it can raise the money. The City may be difficult just now but, as Hudson pointed out, there is still a good deal of private money out there - including that of Kip Bertram, who sold the family firm for a good price in 1999. It is likely now to be sold for rather less than the £35m-plus that Coutts paid him, less even than the £29m Woolworths paid just under two years ago. Proceeds of the sale will be used by Deloitte to pay off debts to EUK, which owns Bertrams' share capital.
A tired-sounding Hudson explained that this has been, and remains, a far more complicated situation than the collapse Thomas Cork four years ago, both in terms of timescale and, of course, timing. 'It is a more complicated and far bigger scenario - difficult for both publishers and for the administrator.' Moreover, Cork was 90% books (the remaining 10% was hair products, which Cork supplied to Tesco), whereas books are only around 15% of EUK's business.
Meanwhile, today sees the launch of 'Woolworths' Biggest Ever Sale', with discounts of up to 50% on everything but concessions, according to an announcement from Neville Kahn, Joint Administrator and reorganisation services partner at Deloitte. Additional staff have been hired to deal with the expected increased footfall. New goods have been supplied to all stores, with more to be delivered in the coming days. 'There is continuing interest in the core Woolworths business and the sale will continue whilst potential buyers finalise their plans for the purchase of the business,' Kahn explained in a statement.