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High www.pwc.co.uk In accordance with paragraph 49 of Schedule Bi \i%J$ — of the Insolvency Act 1986 ]..etai1 Lirrrited in and rule 3.35 of the Insolvency (England and Wales) Rules 2016 adlTlinistration Court of Justice, Business and Property Courts of England and Wales, Insolvency and Companies List Date: 21 December 2017 (ChD) Anticipated to be delivered on 27 December 2017 Case No. CR-2o17-oo9567 Joint administrators’ proposals for achieving the purpose of administration pwc Contents Abbreviations and definitions 1 Why we’ve prepared this document 3 A summary of what you cotild recover 4 Brief history of the Company and why it’s in administration 5 What we’ve done so far and what’s next if our proposals are approved 7 Estimated financial position 10 Statutory and other information 11 Receipts and payments account 12 Appendix A: Group structure 13 Appendix B: Pre-administration costs 14 Appendix C: Copy of the Joint Administrators’ report to creditors on the pre packaged sale of the business and all of its assets i6 Appendix D: Estimated financial position including creditors’ details WS Retail Limited (in administration) — Joint Administrators’ proposals for achieving the purpose of administration WS Retail Limited (in administration) — Joint Administrators’ proposals for achieving the purpose of administration Abbreviations and definitions The following table shows the abbreviations and insolvency terms that may be used in this document: Abbreviation or definition Meaning Administrators/we/us/our Matthew Boyd Callaghan, Ian David Green and Zelf Hussain ABLs Asset Based Lenders, namely Barclays Bank PLC, PNC Business Credit (a trading style of PNC Financial Services UK Limited), Santander UK plc, HSBC Invoice Finance (UK) Limited and RBS Invoice Finance Limited BETS Department for Business, Energy & Industrial Strategy the Company T5 Retail Limited P&H Palmer & Harvey McLane Limited Other Group Companies Palmer & Harvey (Holdings) PLC; Palmer & Harvey McLane (Holdings) Limited; P&H (1925) Limited; P&H Direct Van Sales Limited; P&H Sweetdirect Limited; P&H Direct Limited; and P&H Snacksdirect Limited The P&H Group The Company, P&H and Other Group Companies Tobacco Companies Imperial Brands Finance PLC and Gallaher Limited HMRC HM Revenue & Customs 1A86 Insolvency Act 1986 IRi6 Insolvency (England and Wales) Rules 2016 M&A Mergers and Acquisitions preferential creditors Primarily employee claims for unpaid wages earned in the four months before the insolvency up to £8oo, holiday pay and unpaid pension contributions in certain circumstances prescribed part The amount set aside for unsecured creditors from floating charge funds in accordance with section 176A 1A86 and the Insolvency Act 1986 (Prescribed Part) Order 2003 Ashursts Ashurst LLP, solicitors Bargain Booze Bargain Booze Limited, the purchaser of the business and assets PwC PricewaterhouseCoopers LLP RPS Redundancy Payments Service, part of the Insolvency Service, which is an executive agency sponsored by BEIS, and which authorises and pays the statutory claims of employees of insolvent companies under the Employment Rights Act 1996 Sch Bi 1A86 Schedule Bi to the Insolvency Act 1986 secured creditor A creditor with security in respect of their debt, in accordance with section 248 IA$6 SIP Statement of Insolvency Practice. SIPs are issued to insolvency practitioners under procedures agreed between the insolvency regulatory 1 WS Retail Limited (in administration) — Joint Administrators’ proposals for achieving the purpose of administration authorities. SIPs set out principles and key compliance standards with which insolvency practitioners are required to comply. SIP 9 Statement of Insolvency Practice : Payments to insolvency office holders and their associates SIP 13 Statement of Insolvency Practice ;: Disposal of assets to connected parties in an insolvency process SIP 16 Statement of Insolvency Practice 16: Pre-packaged sales in administrations SPA The agreement for the sale and purchase of the business and assets of the Company dated 15 December 2017 and made between WS Retail Limited,and Bargain Booze Limited LtO Licence to Occupy TUPE Transfer of Undertakings (Protection of Employment) Regulations 2006 unsecured creditors Creditors who are neither secured nor preferential 2 WS Retail Limited (in administration) — Joint Administrators’ proposals for achieving the purpose of administration Why we’ve prepared this document On 15 December 2017 the Company went into administration and Ian Green, Matthew Callaghan and I were appointed as joint administrators. We tell you in this document why the Company was put into administration. We give you a brief history and set out our proposals for achieving the purpose of administration. We include details of the Company’s assets and liabilities, and say how likely we are to be able to pay each class of creditor. According to IA$6, the purpose of an administration is to achieve one of these objectives: (a) rescuing the company as a going concern, or if that is not possible or if(b) would achieve a better result for the creditors than (a) (b) achieving a better result for the company’s creditors as a whole than would be likely if the company were wound up (without first being in administration), or finally, if that is not possible (c) realising the company’s assets to pay a dividend to secured or preferential creditors. In this case, we’re following objective (b) for the Company, to achieve a better result for creditors than would be likely if the Company were wound up (without first being in administration). Our job is to manage the Company until creditors agree our proposals for achieving the purpose of administration and we’ve implemented them so far as possible. After that the administration will end. The whole of this document and its appendices form our statement of proposals for achieving the purpose of administration. We’re not seeking a decision from the creditors to approve our proposals because we think the Company doesn’t have enough assets to pay a dividend to unsecured creditors other than from the prescribed part. So, our proposals will be treated as approved unless enough creditors ask us to seek a decision to approve them. This would happen if at least io% in value of the total creditors ask us to do so (inline with rule 15.18 IRi6) within eight business days of the date we deliver the proposals to you. If you’ve got any questions, please get in touch with my colleague, James Moran on 0113 289 4067. Signe ZeIf Hussain Joint administrator of WS Retail Limited Matthew Catlaghan, Ian Green and ZeifHussain have been appointed asjoint administrators of W$ Retail Limited, to manage its affairs, business and property as agents and act without personal liability. All are licensed in the United Kingdom to act as insolvency practitioners by the Institute of Chartered Accountants in England and Wales. Thejoint administrators are bound by the Insolvency Code ofEthics which can befound at: https://www.gov.uk/government/publications/insotvency-practitioner-code-of-ethics. Thejoint administrators are Data Controllers ofpersonal data as defined by the Data Protection Act 1998. PricewaterhouseCoopers LLP will act as Data Processor on their instructions. Personal data will be kept secure and processed onlyfor matters relating to the administration. 3 of administration WS Retail Limited (in administration) — Joint Administrators’ proposals for achieving the purpose A summary ofwhat you could recover Estimated outcomefor secured creditors What secured creditors are owed: AELs c.i187.4m Tobacco companies c.f66m % Recovery Forecast timing What we think secured creditors could recover: 12-13% for first Uncertain ranking charge holder Estimated dividend prospects For preferential creditors: N/A N/A for unsecured creditors: 1% Uncertain This is a brief summary of the possible outcome for creditors based on what we know so far. You shouldn’t use it as the main basis of any bad debt provision or debt. Please read the rest of this document. 4 WS Retail Limited (in administration) — Joint Administrators’ proposals for achieving the purpose of administration Briefhistory ofthe Company and why it’s in administration Background The Company was a subsidiary of P&H, which together with its subsidiaries was a delivered wholesaler, supplying supermarkets, convenience stores, forecourts and other retail outlets with tobacco and ambient goods. A group structure is shown at Appendix A, for your information. P&H, along with the Other Group Companies, entered administration on 28 November 2017 The Company is a convenience store operator which trades under the brand Central Convenience Stores and operates across the South and South West of England. The Company was started in 2012 and expanded its footprint rapidly. The average store size is between i,ooo and 2,000 sq ft with approximately 3,500 products being displayed in each store. The stores sell groceries, tobacco, confectionaiy, soft drinks, alcohol and newspapers/magazines, as well as local produce varying by store. Post Office services are also offered at some locations. There were 109 leased stores and i8 approved franchised stores, operating as convenience stores, garage forecourts and newsagents, in addition to the head office at Ringwood. The Company employed around 1,300 staff, at stores and head office and it sourced approximately 6% of its product range from P&H, excluding fuel, lottery and services. The circumstances leading to our appointment The P&H Group had struggled to deliver budget for a number of years. These poor financial results, along with cash management challenges, resulted in the P&H Group facing increasing cash flow pressures in March 2017. In April 2017, the P&H Group agreed terms with its existing lenders as well as its two significant suppliers in Imperial Tobacco Limited and Gallaher Limited. Under this agreement, the P&H Group’s lenders and two largest tobacco suppliers supported the business and agreed to a revised financing arrangement which allowed the P&H Group to meet a debt repayment in April 2017, as well as making amendments to future scheduled debt repayments, covenants and other obligations.