Discount retailer Cheap as Chips has had administrators appointed in relation to the sale of the business. On December 30, Palcove Pty Ltd, trading as Cheap as Chips, announced it had entered into a contract with discount store Choice for the sale of the business.

The sale is subject to a proposed restructure.

Owned by private equity firm Alceon, Cheap as Chips has 47 stores in SA, Victoria, and NSW, and employs around 525 staff. The purchasing agreement with Choice will result in the sale of 44 stores. Three stores in Albury, Wonthaggi, and Windsor Gardens will be closed by the time of Choice’s purchase completion.

Administrators Glenn Livingstone, Benjamin Ho, and Nicholas Charlwood, from WLP Restructuring Partners, have been appointed to oversee the restructuring of Cheap as Chips. They will assess the business’s sale terms and expect no further store closures.

“Our immediate focus is on working with creditors, management, staff and the purchaser to ensure continuity of operations and employment, while examining the proposed transaction. In this instance, appointing administrators provides an independent and structured process to manage the sale of Cheap as Chips, supported by the company’s major creditor,” Livingstone said.

“The administrators will honour ‘chippie rewards’, loyalty benefits, and gift cards on a dollar-for-dollar spend basis during the administration process, up until January 31. We encourage all customers to redeem these rewards before they expire.” 

The first meeting of creditors is scheduled to occur by January 12.

A spokesperson for Cheap as Chips added: “We look forward to working with all parties to finalise the restructure and enable the restructured business and the majority of employees to continue successfully into the future under Choice ownership.” 

The Australian Financial Review has reported that redundancies are to be expected at Cheap as Chips’ head office. It added that the company recorded a $34.9 million loss for the 12 months to the end of June last year.