Torex escapes troubles

Torex Retail's shares have been suspended since January

Software firm Torex Retail, currently at the centre of a Serious Fraud Office investigation, has sold its operating assets to a private equity fund for £204m.

The holding company, Torex Retail Plc, will go into administration, leaving its shareholders and unsecured creditors with nothing.

The £204m paid by Cerberus will go towards paying off £212m in debts and liabilities at the company, which provides software to the likes of McDonald’s and Tesco.

Shares in Torex Retail were suspended in January when chief executive Neil Mitchell issued a shock profits warning and blew the whistle on alleged financial irregularities, including false accounting and money laundering.

The sale of the business was the only viable option, says Steve Marshall, chairman of the holding company, and was achieved despite complex corporate governance and financial issues.

Ovum analyst Phil Codling says it is a sorry end to Torex Retail. ‘The firm will be remembered not just for its ambitious string of retail sector purchases, but sadly also for its unfolding scandal,’ he said.

‘When we finally learn the facts, they will not make pleasant reading. The lessons to investors are pretty clear: if something looks too good to be true, it probably is.’

Cerberus has taken over Torex’s operations free from debt and the threat of legal proceedings, says Codling. But it will need much reviving and a name change to escape Torex’s past.