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Thu 12th Nov 2020 - Caffe Nero launches CVA proposal
Caffe Nero launches CVA proposal: Caffe Nero has confirmed the launch of a Company Voluntary Arrangement (CVA) proposal following the impact of covid-19 on the business on Thursday (12 November). The Gerry Ford-owned business, which was founded in 1997, currently operates 800 sites across the UK, employing more than 6,000 people. Propel understands if there are any site closures they are expected to be minimal. It is thought that the principal objectives of the CVA proposal are to move the majority of the group’s sites and concessions to a turnover-based rent. Propel understands landlords will receive a payment of approximately 30p in the pound in respect of landlord/non-critical creditor arrears, which is thought to be more favourable than is typical. The company said it had been “significantly impacted” by the effects of covid-19 due to the forced closure of the business, beginning in March, for several months by the government and the subsequent forced conversion to a takeaway-only business in various parts of the UK through the autumn. The company said that with many people continuing to work from home, ongoing limits to social interaction and a sustained reduction to footfall in city centres, it is unclear how long this will impact Caffe Nero. The business has, therefore, undertaken the CVA to “better manage its fixed costs moving forward”. Ford, founder and group chief executive, said: “Prior to covid-19, the business had been trading strongly, and had achieved 83 consecutive quarters of sales growth. However, like so many businesses in the hospitality sector, the pandemic has decimated trading, and although we had made significant progress in navigating the financial challenges of the first lockdown, the second lockdown has made it imperative that we take further action. I am grateful for the support of our business partners, suppliers and landlords, as we address our fixed cost base so we can continue to protect jobs, which has been our focus since March. We have worked tirelessly to adapt to the new trading environment covid-19 has created. We have expanded our coffee at home range, launched click and collect for the first time via our app and we have begun offering a delivery service through Uber Eats. However, with our dine-in facilities now closed for a second time, we have little option but to launch this CVA to safeguard the future of our business.” Will Wright and David Costley-Wood from KPMG’s Restructuring practice are the proposed nominees of the CVA. Wright, head of regional restructuring at KPMG, said: “Caffe Nero is an iconic brand on the UK’s high streets with a terrifically loyal customer base. However, like many others across the sector, the impact of measures introduced in response to the covid-19 pandemic has been devastating. “In putting forward this CVA proposal, the directors have worked hard to strike a fair compromise with stakeholders to provide the flexibility the business urgently needs to get it through the pandemic.”

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