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Thu 2nd Apr 2020 - Future of GBK in doubt, government risking ‘irreparable’ damage to economy
Future of GBK in doubt after Famous Brands pulls plug on investment: The future of Gourmet Burger Kitchen (GBK) is in doubt after parent company Famous Brands pulled the plug on its investment. Famous Brands stated: “Shareholders are referred to the voluntary update published on Monday, 23 March in which it was advised a deterioration in GBK’s store sales in the UK had commenced on 1 March 2020 due to the covid-19 pandemic. Shareholders were further advised the respective governments of the UK and Republic of Ireland had ordered all restaurants in those countries to close indefinitely and until further notice. It was noted while various measures of support were offered to the industry to mitigate the economic impact of this decision, the uncertainty regarding resumption of trading was cause for concern in both markets. In light of the abovementioned directive in the UK and Ireland, the board of Famous Brands has reviewed its investment in GBK, a wholly-owned subsidiary incorporated in the UK. The board has taken the decision to not provide any further financial assistance to the GBK business. Accordingly, the board of GBK will consider the options available to the business. The board’s decision to withhold further financial support for GBK may result in an impairment of the full value of Famous Brands’ investment in GBK. The precise valuation of such an impairment would be determined in due course. A further announcement will be issued as soon as reasonable certainty in this regard has been obtained. These deliberations may have a material effect on the price of Famous Brands’ securities. Accordingly, shareholders are advised to exercise caution when dealing in the company’s securities until a further announcement in this regard is made.” South Africa-based Famous Brands, which also operates the Wimpy and Steers concepts, acquired the then 75-strong GBK in the summer of 2016 in a deal believed to be worth £120m. GBK undertook a company voluntary arrangement at the end of 2018, which saw circa 20 sites close.

Government is risking ‘irreparable’ damage to economy, warns UKHospitality: UKHospitality has urged the government to extend the moratorium on commercial property evictions or risk "irreparable" damage to the economy. In a letter to housing secretary Robert Jenrick, the trade body claimed “hostile tactics” from landlords “risk crippling the hospitality sector”. The government has introduced emergency legislation to protect business-owners, including a ban on evicting commercial tenants for three months. In the letter, which was copied to business secretary Alok Sharma, UKHospitality chief executive Kate Nicholls called for an extension to cover all sanctions, such as winding-up orders and commercial rent arrears recovery, for non-payment of rent. She added the moratorium should be extended to six months. She said: “We understood the legislation would give a signal to landlords to begin to negotiate rent deferrals and waivers to ensure businesses survive this crisis. The reaction from landlords has been mixed in their approach but there is a significant proportion of the landlord community that has taken a negative approach and instigated, or threatened to instigate, a range of alternative sanctions that risk crippling the hospitality sector, wiping out businesses and costing hundreds of thousands of jobs.” UKHospitality said it recognised property-owners were also under pressure and added there could be "a broader debt enforcement moratorium for all business types and allowing more time to access available funding and secure bilateral agreements”. Without it, she warned, the government risked “irreparable damage to the physical business environment of the country”.

David Roberts to explore how EIS and SEIS could ride to sector’s rescue in latest Premium column: David Roberts, who is head of leisure at global law firm CMS and co-founder of skinny chops concept Blacklock, will explore how Enterprise Investment Schemes (EIS) and Seed Enterprise Investment Schemes (SEIS) could ride to the sector’s rescue in the latest Propel Premium column, which will be sent to subscribers on Friday (3 April) at 5pm. Meanwhile, Premium Diary will rummage through the rumour mill looking for nuggets of hope and inspiration. Subscribers will also receive an updated version of the database of multi-site companies next week. Another 100 businesses have been added to the list, taking the total to 1,600. The database features information such as number of sites, type of operation and key people at the business. Subscribers also receive their morning newsletter 11 hours early, at 7pm the evening before our 6am send-out, discounts to attend Propel conferences and events, and regular columns from Propel insights editor Mark Wingett. An annual premium subscription costs £395 plus VAT for operators and £495 plus VAT for suppliers. Email anne.steele@propelinfo.com

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