A place of safety

Last year, I characterised Laurence Orbach’s return to the Quarto Group as something taken from Thomas Middleton’s play The Revenger’s Tragedy. In light of this week’s welcome Hilary Mantel news, perhaps I should have shifted centuries, for the story of Quarto is not about one person enacting their return to a business they were unceremoniously ejected from six years earlier, but about what remains after the plot has run its course.

In a frank interview in this week’s magazine, Quarto chairman Andy Cumming explains the backdrop: the debt had been too high for too long, and the banks placed the business in their restructuring units, described by Cumming as being in "intensive care". Cumming, who had joined only months before the fatal a.g.m. of May 2018, when Orbach and fellow shareholder C K Lau performed their boardroom putsch, says that although there was no "cliff-edge", there was an urgent requirement to convince the banks to grant it more time to get its performance back on track. Orbach resisted, voting against a resolution that according to past chief executive Marcus Leaver would have enabled the group to raise $30m from its shareholders. In retrospect, the numbers are dizzying. In 2017, Quarto’s earnings were $8.5m, with net debt at $64m, some 7.5 times profit at a time when banks are said to prefer a ratio of debt and profit of three times.

It is easy to cast one shareholder as the villain—share placements come at a cost, and for Orbach would have diluted his holding at a price he may have regarded as too low, an issue he has long had a problem with. And here he may have had a point. For much of its 40 years Quarto has barely missed a beat: growing to a sales high of $182m and returning a profit every year since 1999, bar 2017. His relationship with The Bookseller may not always have been easy, but Orbach has been a publishing pioneer every bit as important to the sector as Peter Kindersley or Peter Usborne.

But enough about the past. For Cumming the importance is that the business meets its numbers, continues to apply pressure to costs—around 70 staff have left in the past year, with the number of imprints falling and the publishing schedule much reduced—and gets its debt down to the three times ratio seen as the "magic number".

To secure its future, the publishing needs to return to centre stage. Under Orbach Quarto had a reputation as a tough place to work, with its coedition engine-room providing content for other publishers to make sing; Leaver shifted it closer to a publishing model with success coming in particular from its children’s imprints, most notably Wide Eyed and its Little People, Big Dreams series. And with the backlist its ballast, Quarto must rediscover the vision that has seen its kids’ publishing business grow 170% in six years. Having looked in the mirror, it needs to find the light.

There is a lesson. As Hilary Mantel once said, almost anything can be turned around, out of every ditch there is a path. It did not end so well for Thomas Cromwell, of course, as we will read. For Quarto, though, the play goes on.