Gerry Ford, the controlling stakeholder of Nero Holdings, pledges a £5m survival fund for Caffè Nero.
Creditors of the coffee chain voted earlier this week and approved a CVA after the board refused to adjourn the vote following late emergence of a takeover bid.
As part of the CVA, on the condition it was approved, shareholders committed to provide a £5m standby fund for the business, in case additional liquidity was needed. This is to be particaulary helpful in ensuring the survival of the business and protecting creditors until more normal trading conditions can return and when the agreed turnover-based rent structure can occur.
Mohsin and Zuber Issa, the billionaire brothers behind the British petrol retailing powerhouse EG Group, have launched a takeover bid for Caffe Nero, just hours before the chain seeks approval from landlords to cut its rent bill.
A CVA is to be voted on this afternoon. However, it is unclear if Caffe Nero has responded to the EG offer yet and so what the offer terms are - could the bid force the coffee chain to postpone the vote?
Last night coffee chain, Caffe Nero put itself into a company voluntary arrangement.
Founder, Gerry Ford, explained that this was due to the second lockdown which has caused the chain to suffer, from limits to socialising, less shoppers in town centres and workers being told to work from home.
KPMG are working with the company on this insolvency procedure. The CVA needs to be backed by landlords and creditors to be successful.
It is understood that high street coffee chain, Caffe Nero, is the latest to look into rent cuts from its landlords in order to allow itself to recover from COVID-19 which has caused devastation to the hospitality sector.
KPMG has been appointed to help the chain assess its options which include mechanisms to cut rents and close stores. Could a CVA, known to help struggling businesses cut rents and close stores, be likely?
Caffe Nero has 660 UK stores, with almost all of its outlets, minus 30, reopening since the coronavirus lockdown ended in June.
Before Coronavirus hit, 135 million customers were served annually and the chain had around 5000 employees. As with others in the hospitality sector, the unprecedented virus and lockdown has had a massive impact.
A source close to the company has said that exectuvies have been engaging in ‘’constructive dialogue’’ with landlords but needed talks to intensify as the company seeks to address its fixed cost base.
Sky News report more.