The future of dozens of pharmacies across the country remain in limbo after an 11-hour rescue deal for Priceline Pharmacy’s largest franchisee collapsed.
Retail group Wesfarmers placed 54 Infinity Pharmacy Group stores into receivership in December after it was revealed that creditors were owed more than $400million.
The Australian conglomerate had been on the brink of injecting equity and new life into Infinity Pharmacy Group before abruptly pulling the plug.
Wesfarmers Health chief customer officer Richard Pearson described the move at the time as ‘unavoidable’, citing Infinity’s failure to meet financial obligations over a prolonged period and worsening debts.
He has since confirmed that recapitalisation plans won’t go ahead.
‘Community pharmacies hold a trusted position in Australia, which the over-leveraged approach to network growth pursued by Infinity’s management risked undermining,’ Mr Pearson explained in a note to franchisees and staff this week.
‘Therefore, after extensive engagement with Infinity management and creditors and detailed financial due diligence, we had no option but to draw a line in the sand.’
Wesfarmers spent three years supporting Infinity Pharmacy Group before a ‘breakdown of trust across all parts of the relationship’.
An 11-hour rescue deal for Infinity Pharmacy Group, Priceline Pharmacy’s largest franchisee has collapsed
The move from Wesfarmers puts dozens of Priceline stores at risk
The retail giant has accused Infinity Pharmacy Group’s owners of launching debt-fuelled acquisition spree while failing to pay back suppliers and creditors.
‘Time was running out because they owed money to a lot of people. The performance was deteriorating,’ Wesfarmers Health managing director Emily Amos told The Australian Financial Review.
‘We were completing due diligence through December on the recapitalisation plan … in that time, the Infinity management team was off trying to buy more stores with more debt. We do not know where that money was coming from.’
Australian Pharmaceutical Industries is owed $110million, while three of the Big Four banks are owed a combined $145million.
Receivership firm KPMG and voluntary administrators Teneo have taken over operations of Infinity’s 91-store pharmacy network.
They are also facilitating the sale process, which has already sparked interest from rival pharmacy groups.
Infinity Pharmacy employs 1,200 staff across almost 100 stores mostly located in Queensland and NSW.
