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Peacocks takeover takes new turn as Edinburgh Woollen Mill quits talks

Pakistani textile billionaire Alshair Fiyaz now the frontrunner to buy the failed 600-store fashion chain

Edinburgh Woollen Mill has pulled out of the bidding for Peacocks, putting the Pakistani textile billionaire Alshair Fiyaz in pole position to buy the failed fashion chain.

Sources close to the talks said Fiyaz, who is working with Solstra Capital, a Danish investment fund, had put the most credible offer on the table for Peacocks’ 600-store chain.

Administrators at KPMG are considering second-round bids for the group in the hope of selling the business as a going concern and saving 9,500 jobs. Two other bidders are believed to be interested in buying Peacocks, including an unnamed Indian manufacturer without a presence in the UK. The administrator is aiming to get a sale agreed by next week.

Sources said a buyer was likely to have to pay up to £25m for Peacocks and find about £50m of working capital. Edinburgh Woollen Mill, which last year bought the Jane Norman chain out of administration, is understood to have been interested in a “substantial parcel of Peacocks stores”. But the privately owned company said it had decided it would no longer be pursuing a bid. It did not give any reasons.

Fiyaz is reported to be working with Peacocks’ managing director, Tim Bettley, finance director Roy Ellis and Neil Burns, chief operating officer. He is also rumoured to have Peacocks’s former chairman, John Lovering, on board.

Previously unknown in the UK, three years ago Fiyaz bought Magasin du Nord, an upmarket Danish department store, which he went on to lease to Debenhams, the department store where Lovering was previously chairman.

Peacocks went into administration last month after talks on restructuring part of its massive debts collapsed. It owes £750m in total according to KPMG, about the same as the overall sales of the group.

Although the underlying retail business was profitable, Peacocks struggled to cope with complex loans put in place by its hedge fund backers.

KPMG has previously announced 249 job cuts from Peacocks’ head office. Further jobs were cut at the Bonmarché chain, where 160 stores closed before a further 230 were sold to private-equity firm Sun European Partners. The collapsed chain is the largest retail casualty since the demise of Woolworths in 2008.

Peacocks traces its history back to 1884, when Albert Frank Peacock founded Peacock’s Penny Bazaar in Warrington, Cheshire. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds