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CHAMP- and Catalyst-backed retailer enters receivership

Talks have failed between banks and Australian Discount Retail, the country's largest discount retail group, over company debts of A$96m.

Australian Discount Retail (ADR), a portfolio company of Australian private equity firms CHAMP Private Equity and Catalyst Investment Managers, has gone into receivership.

With 402 stores in Australia, ADR is the country’s largest discount variety retailer. Its three core retail chains are discount stores Sam’s Warehouse; convenient stores Crazy Clark’s and Go-Lo; and bargain stores Chickenfeed. Chickenfeed, a standalone operation, is not in receivership or voluntary administration.

In 2008, ADR had an annual sales turnover of A$893 million ($582 million).

ADR was placed into administration when negotiations failed between the company and its banks, nabCapital, ANZ and BOS International (Australia), over the repayment of A$96 million.

“ADR had not been immune from the retail downturn and the reduction in consumer demand,” CHAMP and Catalyst said in a joint statement.

ADR intends to “trade the business with as few interruptions as possible with a view to selling the business as a going concern”, according to the company’s website.

In 2005, CHAMP and Catalyst each bought a 50 percent stake in ADR for A$200 million from Australian retailer Specialty Fashion Group and New Zealand retailer Warehouse Group.

Sydney-based CHAMP is currently investing out of CHAMP II Funds, a 2005 vintage which closed on A$950 million. The fund targets management buyouts of companies with enterprise values above A$100 million, typically investing above A$30 million per deal.

Catalyst was established in 1989 and was acquired by financial services firm Prudential in 1998. It became wholly independent in 2006 and has 13 investment professionals that operate from offices in Sydney and Melbourne.

CHAMP and Catalyst did not return requests for comment at press time.