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Potential buyers circle Red Letter Days

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4th Aug 2005
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Red Letter Days, the gift experience business founded by Rachel Elnaugh, TV 'personality' and only female member of BBC2's Dragons Den, went into administration on Monday. This was followed on Tuesday by news of a possible rescue by fellow Dragon Peter Jones and Theo Paphitis, the former chairman of Millwall Football Club, who are discussing buying the business with the administrators, Kroll.

Elnaugh's problem is potentially embarrassing for the BBC, which has only just finished recording a second series of Dragon's Den. On the show, budding entrepreneurs pitch their ideas in the hope of impressing a team of self-made millionaire business 'gurus', and persuading them to invest in their dreams. The Dragons are a tough panel of judges, and the show's appeal lies in a combination of their screen personalities and the often hopeless pitching skills of the would-be entrepreneurs.

Red Letter Days was founded by Elnaugh while she was working as an accountant with Arthur Andersen. It has been struggling for some months, reporting a £4.7 million loss in the year ending 31st July 2003, with Ernst and Young warning of 'fundamental uncertainty' in their audit report.
The business has also been beset by cash-flow problems, allegedly caused by 'accounting issues' including fair values.
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The company offers special gift experiences for special occasions, which include racing cars, hot air ballooning and parachute jumping. Vouchers are purchased in exchange for the 'gift experience'. Under the circumstances this means that only those who purchased their experience by credit card will have any certainty of compensation, depending upon the terms of the card issuer. The company says that it is solvent and that all debts will be repaid once a suitable buyer is confirmed

Potential buyer Jones, the founder of Phones International and other businesses, has an estimated worth of a £300 million.

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