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A last-ditch effort to secure working capital for Booktopia (ASX: BKG) has failed as the online bookseller, which debuted on the Australian Stock Exchange in late 2020 with a market capitalisation of $315.8 million, calls in voluntary administrators.
Booktopia's transition to a highly automated customer fulfilment centre in Sydney's Strathfield South was to be the company's undoing, with the move requiring a marketing pull-back to withhold sales as inventories and logistics took a temporary hit.
This all happened at a time when Booktopia had already been suffering from delays in deliveries, weaker market conditions, and the high-profile executive departures of its CEO and CFO.
Booktopia was unable to capitalise on the downfall of global competitor Book Depository as it was discontinued last year by Amazon, but Amazon itself remains a potent competitive force in the Australian market, whilst a significant volume of discounted books is still sold by retailers like Big W, Kmart and Target.
It also probably didn't help that Spotify introduced an enormous library of free audiobooks last year to premium subscribers.
To cope with numerous challenges, a strategic review at Booktopia determined that 50 people would need to be made redundant to save costs, but this also implied a significant redundancies bill that the company could not afford with existing cash reserves that were just $212,000 at the end of March.
For weeks now the group has been trying to wrangle the necessary capital to stay afloat and pay its fired employees, extending share trading suspensions three times before today's announcement.
McGrathNicol Restructuring partners Keith Crawford, Matthew Caddy and Damien Pasfield are undertaking an urgent assessment of Booktopia’s business while options for its sale or recapitalisation are explored.
The first creditors' meeting will take place by Monday, 15 July.
Prior to Booktopia's trading halt on 13 June, the company was worth 4.5 cents per share (cps) representing a market capitalisation of $10.27 million.
More to come...
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