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rdmBlueBackgroundBY RICHARD DE MELIM


Sun Capital Partners has been a good owner in the furniture industry, supporting the successful turnarounds of three of the UK's biggest home furnishings retailers.


Sun clearly has an eye for a bargain and a great sense of picking the right leader for its portfolio companies, whether incumbent or brought in from outside.


Its furniture retail deals in the UK have followed a similar story.


The investment house picked up ScS off the floor in 2008 in a prepack deal and oversaw a transformation that led to its return to the stock market in 2015.


Similarly with Dreams, it bought the business out of administration in 2013, with the retailer now recording double-digit percentage pretax margins.


Sun Capital has owned Sharps, the bedroom furniture and home office vertical, in its current guise since 2011, following the carve up of HomeForm, which also ran Moben, Dolphin and Kitchens Direct.


As we report today, Sharps is now also closing in on double-digit profit margins — it made £7.2 million on sales of £95.2 million last year — and has built a cash pile of nearly £18 million.


There was talk in the spring of 2017 — accompanied by a national newspaper article to go with it — that Sun was looking to realise its investment in Sharps, hoisting the metaphorical for-sale sign with a mooted asking price of £80 million.


Since then, there has been no further update.


But the retailer's balance sheet indicates there may be movement of some kind in the 12 months to come.


Since 2013, it has been paying back third-party debt in relatively modest quarterly instalments, but the final payment — a sum of £13.6 million — is scheduled to be repaid almost exactly a year from now, in May 2019.


Sun's plans for Sharps should emerge from behind the clouds in the months ahead. Will it pay that off, refinance, or could a sale soon be in the offing?


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