Link to this page: http://www.socialistparty.org.uk/issue/702/13580
Financial vultures kill Peacocks
Dave Reid, Wales Socialist Party
249 workers have been shown the door at Peacocks' head office in Cardiff following the retail company going into administration. They were sacked as the administrators stripped down the company to make it as attractive as possible to potential buyers.
Peacocks is still a profitable company but couldn't afford to pay the interest on a loan its bosses took out with New York hedge funds to buy the company.
According to the Western Mail: "Peacocks has been burdened with a loan of £149 million that was taken out at a massive 17.18% interest rate when chief executive Richard Kirk led a management buy-out in 2006.
"It has been reported that the money is owed to two hedge funds, Och-Ziff and Perry Capital, the same New York hedge funds that bankrolled the bid by the US-based Glazer family for Manchester United.
"Yet the details are difficult to confirm, partly because a holding company called 'Hanson Number 2a', registered in the Cayman Islands, holds the Peacock Group's debt."
And the Royal Bank of Scotland (RBS), which was bailed out in 2008 and is still majority owned by the government, decided that even though Peacocks could afford to pay for further loans to keep it going, it would not extend its line of credit because it can make more money elsewhere. Basically it decided to pull the plug on hundreds of livelihoods.
On 12 January shares of RBS had gone up by 5.5% as a result of 3,500 job losses. John Hourican, head of RBS's investment bank, had been given 21.3 million shares which become due to him in April. According to the Financial Times their value rose by £250,00 as a result of the job cuts.
Less than a week later he shook his head at re-funding Peacocks' loan and the firm went into administration.
Cardiff workers were squeezed by off-shore hedge funds and a failed bank still largely owned by the government. Vince Cable, the Lib Dem business secretary, could have picked up the phone and ordered RBS to save their jobs but the government has a policy of not interfering in the bank that taxpayers, including Peacocks' workers, had bailed out. So workers at Peacocks helped bail out RBS but RBS would not return the favour.
Spot the similarity
La Senza, Peacocks, Bon Marche, Thomas Cook, Hawkins Bazaar, Barratts, and who can forget the one that started it all, Woolworths. The increasing number of high street shops facing liquidation seem to have something in common - price. The most expensive dress available at Peacocks costs £50, while the highest priced at Harrods would set you back £8,750.
But Harrods and similar luxury stores seem unaffected by dropping sales - perhaps because the rich still have plenty of cash to splash while the cuts in jobs and services mean people who were already struggling are having to cut back spending, even on the essentials.
In The Socialist 25 January 2012:
Socialist Party editorial
Socialist Party news and analysis
Socialist Party feature
International socialist news and analysis
Socialist Party workplace news