Dick Smith, one of Australia's best known electronics retailers, has been put up for sale, with lenders taking charge of the troubled company after it failed to secure a funding injection.
A syndicate of its lenders, including National Australia Bank and HSBC, on Tuesday appointed Ferrier Hodgson as receivers and managers over the company, with the aim of salvaging value from the struggling business. McGrathNicol have been appointed administrators.
"We are immediately calling for expressions of interest for a sale of the business as a going concern," Ferrier Hodgson partner James Stewart said, adding that it would be business as usual for the retailer in the meantime.
Dick Smith, with annual sales of $1.3 billion, operates a chain of 393 stores across Australia and New Zealand, with around 3,300 employees.
Mr Stewart said while workers would continue to be paid, customers would not be able to use Dick Smith gift vouchers or receive refunds on layby deposits.
The swift demise for the business comes just two years after private equity firm Anchorage Capital Partners floated the company on the Australian share market at $2.20 a share, valuing it at $520 million.
Dick Smith shares have been battered in recent months after an extended spell of weak sales, with the stock falling to just 35.5 cents before being suspended from trade on Tuesday.
"The suspension from trading marks a very sorry end for investors," CMC Markets' chief strategist Michael McCarthy said.
"The pain of a wipe out will likely increase general suspicion about the value in buying into private equity IPOs."
The retailer first warned in October its full year profit could fall as much as 15 per cent, as it stepped up discounting and advertising to boost sales.
The sales slump continued into November, resulting in the company dumping its profit forecast a few weeks later.
"You have a company that said in August everything was going great, but returns just two months later saying its having problems," the Australian Shareholders' Association's Allan Golding said.
"The question has to be asked - what were the management and directors doing when they signed off on the results?"
The retailer was forced to launch a firesale in early December to clear unwanted stock that cost it about $60 million in writedowns, and had pinned hopes on the crucial Christmas holiday period sales.
However, the weak trend from previous months continued in December, with worse-than-expected sales.
"Whilst confident on the long-term viability of the company, the directors have been unsuccessful in obtaining the necessary support of its banking syndicate to see it through this period," chairman Rob Murray said on Tuesday.
The board explored alternative funding, but was not able to secure this in time to order the required inventory during the next four to six weeks, he said.
Dick Smith's business has long been under pressure, given the competitive market it operates in and the threat from online retailers, Morningstar retail analyst Daniel Mueller said.
"Their product mix has been very commoditised and they haven't been able to meaningfully diversify. Given the operating difficulties they are having, its hard to see a turnaround in the business," he said.
The first meeting of creditors will be held on January 14.
