Will Wright, restructuring partner at KPMG and proposed ‘supervisor’ of the CVA, comments on this week’s news by Byron Hamburgers Limited announcing that 20 of its sites are at risk of closure.
“Over the last ten years, Byron has grown to become a stand-out name within the UK’s casual dining sector. However, in recent times, certain parts of its portfolio have not met expectations, and with gathering economic headwinds starting to impact the sector more profoundly, the directors embarked upon a strategic review of the business as a means of safeguarding its long-term future.
“As part of this strategic review, the directors have been successful in negotiating a financial restructuring with the company’s lenders and shareholders, which will enable new investment to come into the business. Completion of this financial restructuring is conditional on the approval of today’s CVA proposal, which is designed to tackle the cost of the company’s leasehold obligations across its UK restaurant portfolio.
“As with similar CVAs, this arrangement seeks to strike a balance which provides a fair compromise to landlords, while allowing the viable part of the business to move forward across a smaller, more profitable core estate. It’s important to stress that no restaurants will close on day one, and employees, suppliers and business rates will continue to be paid on time and in full.”
“The CVA essentially divides this portfolio into three categories. For a total of 51 Category 1 sites, the leases will be retained at current rents. A further five Category 2 leases, have been identified as being viable at a reduced rent, equivalent to two thirds.
“For the remaining 20 Category 3 sites, a reduced rent, equivalent to 55%, will be paid for six months, while the company engages with landlords to agree the basis of any continued trading from these premises.”
The company needs to secure at least 75% creditor approval for its CVA. A detailed proposal document is expected to be made available to Byron’s creditors via a dedicated website today. The creditors will vote on the CVA on 31 January 2018. KPMG will spend the next two weeks in talks with creditors to ensure they understand the full detail of the proposal.