Blaming a “sustained period of difficult trading conditions”, the company sold its Office Depot business, along with Officeteam brand, to sister company Paragon in late August.
A contemporaneous deal saw OT Group sell its 5 Star brand of office supplies to VOW Wholesale.
Carrying out a comprehensive review of its UK and Irish business, OT Group found that the post-Covid slump in demand for office products was not likely to end, with low office occupancy rates and new working practices to blame.
“The company does not expect office occupancy rates to increase significantly in the foreseeable future, and it has also concluded that the current over-supply of warehousing and distribution facilities in the UK office supplies market is not sustainable,” a letter to OT Group’s suppliers read.
OT Group’s sale of Office Depot has already seen all bar eight of OT Group’s UK and Ireland employees transfer to Paragon, its sister company under investment company Grenadier Holdings, which was itself called Paragon Group until it rebranded in July 2023.
The number of employees involved was not disclosed.
The group employed 553 as of its accounts to 30 June 2022 accounts; that year, the company posted sales of £120.8m and registered an underlying operating loss of £9.3m, compared with sales of £83.8m and an underlying operating loss of £10.7m the prior year.
Some of the employees now with Paragon will accordingly be transferred to VOW Wholesale, which OT Group said will take care of product supply and distribution services for the Office Depot business under a long-term contract.
Printweek understands that some roles are likely to be made redundant following an employee consultation process at Paragon and VOW Wholesale.
“The services provided by Office Depot are highly complementary to Paragon's strategy and add a further business service to its growing portfolio,” read a statement from Paragon on the sale.
“Furthermore, there are clearly opportunities to consolidate and reinforce parallel customer relationships.
“Implementing product supply and distribution services via a third-party logistics model, under a long-term contract with VOW Wholesale, allows us to focus on those customer relationship under a more efficient and cost-effective operating model."
OT Group will withdraw entirely from the wholesale business under its Spicers brand, selling off the 5 Star brand to VOW Wholesale and winding down the rest of its business solvently through a company voluntary arrangement (CVA) to pay off creditors.
A spokesperson for Grenadier Holdings and OT Group told Printweek: “Supplier relationships are very important to Grenadier Holdings and the companies within the Group.
“It is the intention within the CVA that OT Group pay 100% of reconciled and agreed balances. That intention is facilitated by a substantial voluntary contribution of funds by Grenadier Holdings."
OT Group said it expected payments to be phased over a period of no more than nine months.
Arranging the CVA, Anthony Collier and Philip Reynolds of FRP Advisory set up a moratorium on 2 August to establish “breathing space”, OT Group said. Due to finish on 2 September, the moratorium was subsequently extended to 9 September.
At the time of writing, OT Group’s 2023 accounts were overdue to Companies House.
