HSBC takes over Jessops in restructuring

Jessops, the UK's biggest photographic retailer was saved from a potential bankruptcy this week after its banker, HSBC agreed to forego £34 million of debt in exchange for a 47 per cent stake, thus reducing its shareholders' combined equity to just £100,000.

As part of the restructuring, Jessops will be sold to a newly formed company, Snap Equity Limited, which will be 47 per cent owned by HSBC, 33 per cent by pension fund trustees and 20 per cent by an Employee Benefit Trust.

Although in May, Jessops had told its shareholders that their stock would be useless as the company plans to restructure its £61.7-million debt after posting a half-year loss of £13 million, (See: UK's Jessops tells investors stock value has turned worthless) a sum of £100,000 has been made available to be distributed to shareholders. 

Jessops said that the restructuring will save 2,000 jobs directly, as well as others in the supply chain and the restructuring proposal has received approval from the UK Listing Authority and does not require shareholder approval.

David Adams, Jessops executive chairman, said, ''After many months of hard work, we have been able to secure a long-term future for Jessops Group Limited. Thanks to the continued support of HSBC, the restructuring proposal will ensure that Jessops Group Limited remains a fundamentally strong business with a strong presence on the High Street. It will also protect thousands of jobs and ensure that our customers continue to receive the specialist service they expect from us.''

HSBC had loaned £54 million to Jessops to pay the debts of the old business and the banker is foregoing part of the loan in return for taking a 47 per cent stake.