Christmas has come early for Hamleys South Africa – the local franchise operations of the world’s oldest toy store chain – as it has been saved through the business rescue process after facing closure earlier this year.
A new black empowered company called Antares is set to take over Hamleys South Africa, effectively recapitalising the business and saving some 140 jobs. Antares is backed by two independent Joburg-based family-owned retail groups, Osbro Home and Rand Outfitters.
Senior business rescue practitioner from Business Rescue Partner, Stefan Steyn, confirmed to Moneyweb on Monday that a successful business rescue plan had been put together and had received “majority support” from Hamleys SA’s creditors.
“The business rescue team met all the creditors and worked with Hamleys South Africa’s management team to save the business. We believed that it was a business worth saving, so we are glad to have secured a deal with Antares, which is largely backed by Osbro. The business rescue process was crucial for Hamleys South Africa’s survival. Had we not secured the deal, the business would have been liquidated,” he said.
“We had over 30 leads with potential buyers and investors to recapitalise the toy chain, but most were looking for a bargain. Osbro has a track record in retail and realised the value in the Hamleys brand, with their plans aimed at stabilising and growing the business,” he added.
The announcement of the deal follows Moneyweb breaking news in February that the local Hamleys franchise was facing financial trouble and placed into business rescue. At the time, the chain closed one of its biggest stores in SA at Mall of Africa in Waterfall City, which is majority-owned by Attacq Limited. Hamleys’ first store in the country at Greenstone Mall in Edenvale has also since closed its doors.
Ensolor, the local franchise operator of Hamleys in SA, hit financial trouble in January this year following allegations of fraud within the company. When the group was placed into business rescue in February, Steyn would not comment to Moneyweb on the fraud allegations.
Fraud charges laid
He, however, confirmed to Moneyweb on Monday that charges of fraud have now been laid against the Ensolor group’s founder and sole director, Philip Paphitis.
“We have not managed to track him [Paphitis] down, but a case of fraud was opened at the Bedfordview Police Station earlier this month regarding this matter.”
Reiterating a statement Moneyweb received from Hamleys South Africa’s new owners, Steyn noted that the group was in turmoil when it was forced into business rescue in February.
“The business was left abandoned, in debt, along with empty bank accounts by the [then] sole director and shareholder,” he said.
“Despite securing new owners to recapitalise the company, we are still pursuing the former owner and more than R20 million in lost funds.”
Hamleys’ South African franchise has seven outlets operating in the country currently, including stores at Sandton City, Eastgate Shopping Centre, The Zone @ Rosebank, Bedford Centre and Menlyn Park in Gauteng. Its two coastal stores are at Cape Town’s V&A Waterfront and the Gateway Theatre of Shopping in Umhlanga.
A new Hamleys store is set to open in December at Fourways Mall, which has undergone a multi-billion-rand expansion into what is currently SA’s largest shopping centre.
Faheem Mohamed, a director at Osbro Home, told Moneyweb the group sees good potential in growing the Hamleys chain in SA. However, he says over the next 20 months the focus will be on stabilising the business and its existing stores.
“Antares will be the holding company of our Hamleys South Africa business, together with our partners in the venture – the Laher family. In fact, we were told about the Hamleys opportunity by Riad Laher, managing director of Rand Outfitters. We’ve looked at the toy chain’s financials and did our research, and believe we can add value and ultimately grow the chain in SA,” he said.
“With a dozen stores in Gauteng and Limpopo currently, Osbro Home has been in the retail business for 30 years. We import and sell homeware and toys. Our strength on the import side will give us an advantage in growing Hamleys in SA,” he added.
As private investors, Mohamed did not want to reveal how much is being pumped into the Hamleys South Africa recapitalisation. However, he said the group has been in contact with Hamleys’ new global owners, Reliance Brands, a subsidiary of India’s largest company, Reliance Industries.
Hamleys, which was established in 1760 in London, has also faced financial troubles internationally with the growth in online retail, especially in its original home market in the UK. Several stores have been closed in Europe as the company hit financial losses. However, its presence has grown in India, where Reliance Brands has been the franchise operator for years.
The global toy chain has had several foreign owners since 2000 and in May this year was sold by Hong Kong listed C.banner group to Reliance Brands for £70 million. Reliance is led by Mukesh Ambani, who is reportedly Indian’s richest tycoon.