Furniture and electronics retailer Smiths City has bypassed shareholder approval to move forward with its acquisition by Polar Capital, instead entering receivership and re-committing to close seven of its stores.

Directors for the business noted that while shareholder approval was the only outstanding condition of the acquisition, further delays risked jeopardising the completion of the sale as well as the amount to be paid to secured and unsecured creditors. 

“A receivership [will] ensure the timely and orderly transition of the assets to Polar Capital, protect their value and the jobs of the approximately 350 people expected to transition to the new owners with the sale,” Smiths City said in a statement. 

The decision will leave Smiths City ordinary shares with no value following the sale, though following the announcement the company’s share value plummeted 51 per cent to 14 cents per share.

Smiths City chairman Alastair Kerr said while it was disappointing for shareholders, retaining workers’ jobs and keeping the [more than 100 year] legacy of Smiths City alive was pleasing.

The board said it had considered an insolvency process inevitable, as the proceeds of the sale and value of assets wouldn’t have been able to cover the group’s liabilities.

Stores in Mount Wellington, Porirua, Lower Hutt, Kapiti, Whangarei, Invercargill clearance centre and Christchurch outlet will be closed in the coming weeks.

“This has been a very challenging situation, compounded by the unprecedented circumstances, and we sincerely regret that Directors have had to take this action,” Kerr said.