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Mon 6th Jan 2020 - Chilango CVAs approved
Chilango CVAs approved: Chilango’s company voluntary arrangement (CVA) proposals have been approved after receiving the support of the vast majority of Chilango’s creditors and shareholders, with 84% voting in favour of the arrangement for Mucho Mas Limited (the primary trading entity) and 98.6% voting in favour of the Chilango Bonds arrangement. This includes 75% of Chilango’s landlords. The shareholders also approved, by a near 90% vote, the creation of a preferred share class. The preferred share class will keep whole the principal balances and returns of bondholders and note holders while not diluting the voting rights or company ownership of shareholders. Separate from and before the CVA, Chilango took measures to reduce its central costs. In September, founders Eric Partaker and Dan Houghton, acting as directors, took the difficult decision to make their co-chief executive roles redundant and begin the search process for a managing director. Dan Houghton’s co-chief executive role was made redundant on 1 October, with his notice period ending on 31 December. Eric Partaker will remain chief executive until the new managing director joins the business, at which point the role will also be made redundant. Partaker and Houghton will both remain as non-executive directors and major shareholders in the business. Partaker and Houghton said: “We are humbled to have received such strong support from our creditors and shareholders and appreciate how pragmatic and understanding our stakeholders have been. While Chilango remains profitable at restaurant level, with three consecutive years of 6% like-for-like sales growth, the CVA enables the company to exit non-trading leases, reduce rents in select locations, and restructure the repayment profile of the company’s debt. Together with a reduction in central costs, the successful CVA will materially improve the balance sheet and make the business both Ebitda and cash flow positive at group level. Together with our team and partners we’ve created an award-winning brand, a vibrant culture, and delicious food – supported by a supply chain that extends all the way to farms in Mexico and involves some of the top culinary talent in the world. After more than ten years, Chilango has an estate of some of the most prime locations in London, a thriving restaurant in Manchester, and a newly opened restaurant in Birmingham. All these factors combined, together with our amazing restaurant teams, drive the strong, continued sales growth in our restaurants.” Gordon Thomson, a retail restructuring director at RSM, added: “The Chilango CVAs were approved by their creditors earlier today. This endorsement reflects the support for the directors’ proposals and ensures the business is well structured to develop further.”

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