Intertain, owner of 32 Australian-themed bars across the UK, is proposing a Company Voluntary Arrangement to landlords to try and lower debt.
The company’s debt is owed to Moulton’s Better Capital who wants to halve the current burden of £30 million to £14 million by negotiating a revision of lease terms for a few loss-making sites. Intertain has said stakeholders have agreed to the plans, therefore the approval of the CVA will be the landlords’ decision.
CEO John Leslie confirmed the plans are to ensure a ‘long-term sustainable future’. Some sites may need to close while others that are not performing well could become viable if rent is lowered. The company and its landlords will be in discussions over the next few weeks.
A company voluntary arrangement can be a powerful solution for a company in need of a restructure as a CVA can terminate onerous rent leases and expensive contracts. It also protects the company against legal action, ensuring the business can continue running without its reputation being harmed. A CVA is essentially a formal deal between creditors (in this case landlords) and the company whereby a proportion of debt is repaid over a number of years.
Update: 10/02/2015 - the CVA has been approved by creditors, with Zolfo Cooper supervising. The company's debt will be cut from £30 million to £14 million and certain lease terms will be revised, enabling a restructure of the business. Great news!