Shares in Blacks Leisure plummeted more than 50 per cent on Friday 23 December as the company announced that 'it does not have and does not now expect to receive an offer for the shares of Blacks Leisure'.

However, it did confirm that 'a number of parties have submitted indicative offers to acquire the whole or substantially all of the trade, assets and brands of the group' and that its lender, Bank of Scotland, continued to be 'supportive of the ongoing sale process'.

The leisure retailer put itself up for sale on 7 December after it made a £16 million loss in the first half of the year and warned that its full-year performance would disappoint. The group, which sells outdoor clothing, such as fleeces and water-proof jackets, said the warm weather in October and November had negatively impacted trading.

Until recently, the market was expecting Blacks' rival and biggest shareholder, Sports Direct International, to buy out the firm. However, Sports Direct, which holds over 20 per cent of Blacks' shares, said this week that it would not be bidding for the rest of the shares.

This is likely to mean that a pre-pack deal will be the outcome for Blacks. Under a pre-pack deal, a company goes into a formal insolvency process but emerges rapidly under new ownership following a pre-arranged sale. Such an arrangement could allow suitors to cherry-pick Blacks' best assets.

Shares in the company have plunged more than 95 per cent this year, giving it a market value of less than £1 million. This compares to a £36 million debt that the company has on its balance sheet.

This was written for our sister website, Interactive Investor