Blacks Leisure Group unveils CVA plan in bid to save 4,300 jobs
Thanks to the Birmingham Post and Jon Griffin!
We highlighted some weeks ago that Blacks was seeking to restructure following the collapse of a subsidiary company and pressure from the bank. Now a CVA (company voluntary arrangement) has been filed and a creditors meeting called for 23rd November 2009
Now read Jon's story....
Dozens of West Midland jobs remain on a knife-edge after crisis-torn Blacks Leisure Group announced a last-ditch bid to save 4,300 jobs nationwide.
The outdoor and leisure group, which is facing severe cash difficulties, announced a company voluntary arrangement (CVA) proposal to try to safeguard the firm and jobs.
The CVA plan follows a string of closures of Blacks, Free Spirit and Millets stores across the West Midlands, including three at Merry Hill, two at Sutton Coldfield and others in Birmingham, Redditch and Wolverhampton.
Blacks, which recently revealed it had under-performed its six-month budget and was at risk of breaching its banking covenants, is now seeking to offload long-term leases on around 90 closed stores in return for six months’ rental compensation. If the move is accepted, the CVA would give Blacks breathing space and save thousands of jobs at 300 stores which are still trading. The company retains a string of stores still open throughout the West Midlands.
Richard Fleming, UK head of restructuring at KPMG and the proposed ‘supervisor’ of the CVA, said: “The proposed CVA gives Blacks the opportunity to preserve 291 trading stores and around 4,300 jobs.
“The CVA proposal is asking the landlords of 101 unoccupied stores to come to a compromise on the company’s financial liability.
“We believe the proposed CVA offers a fair balance between the operational needs of Blacks and the landlords’ rights under the tenancy agreements.
“The total compensation being offered to the landlords is £7.25 million, which equates to approximately six months rent each. In addition and importantly, given the size of the potential liability, the group will continue to pay rates until the leases are surrendered or forfeited in consultation with landlords.”
Lloyds Banking Group, through its Bank of Scotland business, would take a five per cent stake in Blacks following the deal, subject to shareholder approval. Should this not be agreed, Blacks will pay its bank £2 m in cash.
The CVA would last nine months if voted through by the requisite three-quarters of creditors at a meeting on November 23. Blacks has agreed new facilities of £42.5m with LBG as part of the plan.
The remaining creditors have not been asked to compromise financially but landlords of the operating stores have been asked to move to monthly payments for 18 months.
Blacks announced pre-tax losses of £18.1m in the 26 weeks to August 26, up from £6.7m, as its boardwear division and Blacks and Millets stores dragged the group down.