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Fri 23rd Mar 2018 - Prezzo creditors agree CVA
Prezzo creditors agree CVA: Prezzo has had its Company Voluntary Arrangement (CVA) proposal approved by creditors, which will see the closure of 94 of its 300 UK restaurants and rent reductions at others. More than four-fifths (88%) of creditors voted in support of the move during a shareholder meeting, with the restaurants identified for closure likely to shut in April and May. Prezzo said staff would be made aware of the exact dates “as soon as they were confirmed”. The restaurant chain said “every effort” would be made to redeploy team members affected by the closures, although the CVA involves a requirement to make redundancies. Under the proposal, rent reductions will range from 25% to 50% across 57 sites, with the CVA lasting two years. CVA documents show Prezzo owes secured creditors including Barclays Bank and the Royal Bank of Scotland £154m, while scores of unsecured creditors are owed a total of £65.7m. Among those, Prezzo owes about £600,000 in unpaid electricity bills to British Gas, £364,000 to fruit and vegetable wholesaler Reynolds Catering Supplies, and almost £120,000 to furniture company Boston Interiors. The 94 restaurants that will shut, which includes the entire Chimichanga brand, are Abergavenny, Alton, Amersham, Arundel, Barnet (High Street), Barnstaple, Bedford (MEXIco), Belfast (Victoria Square), Belfast (Boucher Square), Beverley, Blackpool, Blandford, Bournemouth (Chimichanga), Braintree (Freeport Village), Brentwood, Bromley (Chimichanga), Canterbury, Cardiff (Chimichanga), Carlisle, Carmarthen, Catterick, Chatham (Chimichanga), Chelmsford (Baddow Road), Chester (Chimichanga), Cobham (Cleaver), Cramlington, Crawley (Chimichanga), Dalton, Darlington, Deansgate Manchester, Derby (MEXIco), Ealing (Chimichanga), Eastleigh (Chimichanga), Edinburgh (Pier Place), Falmouth, Fareham (Chimichanga), Glasgow Fort, Gloucester, Guildford, Halstead, Haywards Heath, Hereford, Hereford (Chimichanga), Hornchurch (Chimichanga), Ipswich (Chimichanga), Kettering, Kingston, Leicester (Silver Street), Lewes, Lincoln, Maidstone (MEXIco), Midhurst, Milton Keynes (Chimichanga), New Brighton, Newbury, Newcastle, Newquay, Northwood, Norwich (Thorpe Road), Nottingham (Low Pavement), Penarth, Peterborough (Chimichanga), Port Solent (Chimichanga), Poulton, Ripon, Sheffield (Valley Centertainment), Sheffield (Ecclesall Road), Silverburn Glasgow, Solihull (Chimichanga), South Woodford (Chimichanga), Southampton, Southampton (Chimichanga), St Annes on Sea, St Austell, Stamford, Stevenage (High Street), Stratford-upon-Avon, Sudbury, Taunton, Telford (Chimichanga), Tewkesbury, Wandsworth, Wandsworth (Chimichanga), Warrington, Watford (Chimichanga), West Bromwich, Wokingham, Woodley, Yate and Yeovil. According to the terms of the CVA, leases on the 94 restaurants will be terminated in the next eight weeks. Prezzo chief executive Jon Hendry-Pickup said: “I would like to thank our creditors and landlords for supporting our transformation plan. While we continue to be profitable, the pressures on our industry have been well documented. Despite this being a tough decision, the support given today by our creditors shows they believe we have the right approach to transforming Prezzo in the eyes of teams, customers and stakeholders. It has been a challenging time during the CVA process and I would like to thank our suppliers, colleagues and customers for their patience and support.” Prezzo embarked on massive expansion after it was bought by private equity house TPG Capital in 2014 for £300m. Directors blamed a significant increase in costs from wages and business rates for its financial difficulties. The CVA document stated: “It is envisaged that by the exit of loss-making and marginal sites, capital investment can be focused on the core estate where the largest return potential exists. This will improve multiple key indicators, including an average sales ratio of £15,000 per week and FY19 group Ebitda margin by up to 5%. The like-for-like performance of the core estate is expected to remain broadly flat in FY18 and improve to 5% by FY20.” The company’s like-for-like sales fell 8% in 2017. AlixPartners is advising on the restructuring deal. 

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