The Restaurant Group has announced a proposal to reduce the size of its Leisure estate and rental cost base through a company voluntary arrangement (CVA).
In its latest update, the group said the move will “provide a mechanism” to restructure the Leisure estate, having confirmed it had entered restructuring talks earlier this week.
The group has now confirmed its plans to reduce its current portfolio by axing 125 sites, as well as seeking improved rental terms on 85 sites within its remaining trading estate.
The nominees for the CVA will be Clare Kennedy, Peter Saville and Catherine Williamson of AlixPartners LLP.
Assuming that the CVA is approved and “successfully” implemented, the remaining trading estate of the Leisure arm will comprise 160 sites. Approximately 65 Leisure trading sites will be unaffected by the CVA.
In addition, the CVA will include a mechanism to exit 25 previously closed Leisure sites, “further reducing the existing onerous lease provision held on the group’s balance sheet”.
In a newly-released statement, the group said these proposals reflect its “proactive approach to ensuring a long-term sustainable business for all stakeholders in the face of unprecedented disruption to the UK’s casual dining sector”.
It added: “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.”
Andy Hornby, CEO 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.”
He added: “I would like to wholeheartedly thank all of my TRG colleagues for their continued understanding and extraordinary commitment during this unprecedented period.”
Melanie Leech, CEO of the British Property Federation, said: “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.”
She added: “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.”