The Restaurant Group this morning announced a proposal to reduce the size of its Leisure estate and rental cost base by implementing a company voluntary arrangement.
The CVA relates to the statutory entity that principally comprises the Frankie and Benny’s estate. It will have no impact on the group’s Wagamama, Airport Concessions and Pub operations.
TRG said the CVA will provide a mechanism to restructure the Leisure estate by allowing it to exit approximately 125 trading sites and seek improved rental terms on a further 85.
Approximately 65 Leisure trading sites will be unaffected by the CVA.
Assuming the CVA is approved and successfully implemented, it will leave the Leisure business with 160 sites.
The proposal will also include a mechanism to exit approximately 25 previously closed Leisure sites, thereby further reducing the existing onerous lease provision held on the group’s balance sheet.
Andy Hornby, chief executive of TRG, said: “The issues facing our sector are well-documented and we have already taken decisive action to improve our liquidity, reduce our cost base and downsize our operations.
“The proposed CVA will deliver an appropriately-sized estate for our Leisure business to ensure we are well positioned despite the very challenging market conditions facing the casual dining sector.”
TRG said the CVA will not seek to compromise claims of any creditors other than certain landlords, and inter-company liabilities.
The rights and entitlement of all trade suppliers, HMRC and employees will not be affected by the proposals.
In its statement outlining the proposals, TRG also took the step of seeking endorsement from the British Property Federation, the trade body for commercial real estate companies.
Chief executive, Melanie Leech, said: “The Restaurant Group and Alix Partners engaged with the BPF before launching this CVA proposal. This has provided us an opportunity to improve understanding of property owners’ interests and concerns, but ultimately it will be for individual property owners to decide how they will vote on the CVA.
“These situations are never easy, particularly now for the retail and hospitality businesses on our high streets at the sharp end of the Covid-19 pandemic. Property owners, however, need to take into consideration the impact on their investors, including the millions of people whose savings and pensions are invested in commercial property, as they vote on any CVA proposal.”
The attendant creditors’ meeting is scheduled for 29 June 2020.