Retailer Comet to shut at heavy cost to government

LONDON (Reuters) - British electrical retailer Comet will close its remaining stores for the final time on Tuesday as part of a deal that will cost the government more than 23 million pounds, its administrators said.

Deloitte said in a report about the group's collapse that the cost of making almost 7,000 people redundant would reach 23.2 million pounds, a fee that will have to be met at least initially by the government.

The country's tax authority also looks set to miss out on 26.2 million pounds from the closure.

The 235-store Comet chain entered administration, a form of protection from creditors, last month, becoming the latest British retailer brought down by the economic downturn and joining a roll-call of failures this year including JJB Sports, Clinton Cards and Game Group.

The retailer, which had an estimated UK market share of 6 percent, was acquired by private investment firm OpCapita for a nominal 2 pounds in February from Darty, then known as Kesa Electricals.

But the group, which was established in 1933, was hit by increasing competition and a loss of faith by suppliers who tightened their terms on the retailer.

Deloitte said the group had recorded a loss of 95 million pounds in the year to April and a further 31 million pounds loss in the five months to the end of September.

Hailey Acquisitions, the investment vehicle put together by OpCapita, is expected to get payments of just under 50 million pounds due to its position as a secured creditor, however this marks a shortfall of 96 million pounds on the amount it was owed.

(Reporting by Kate Holton; Editing by David Cowell)

Source: http://news.yahoo.com/retailer-comet-shut-heavy-cost-uk-government-191151126--finance.html

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