Blacks Leisure has unveiled details of a proposed company voluntary arrangement (CVA) as part the group’s restructuring.
KPMG has been appointed to supervise the process which would see the outdoor specialist exit 89 of its 392 stores.
KPMG UK head of restructuring Richard Fleming said: “The proposed CVA gives Blacks the opportunity to preserve 291 trading stores and around 4,300 jobs.”
He added: “We believe the proposed CVA offers a fair balance between the operational needs of Blacks and the landlords’ rights under the tenancy agreements. The total compensation being offered to the landlords is £7.25m, which equates to approximately 6 months rent each. In addition and importantly, given the size of the potential liability, the group will continue to pay rates until the leases are surrendered or forfeited in consultation with landlords.”
Meetings will now be held with landlords to explain the details and a creditors’ meeting will take place on November 23, 75% of the creditors will need to agree to the CVA terms for it to be passed.
The rest of Blacks’ creditors will not be asked for any financial compromise but the landlords of the remaining stores unaffected by the CVA have been asked to offer monthly rent payments for 18 months.
Neil Gillis, chief executive, said: “After several years of losses Blacks embarked on a turnaround plan in early 2008. That plan successfully reduced the cost base of the business, reduced our working capital requirements, improved retail standards and created a successful new retail format. However, the severity of the current trading environment and the drag of the loss-making Boardwear business has required a more radical set of measures to complete the turnaround of this business. The restructuring plan announced today and the new banking facility supporting it provide a realistic opportunity to ensure the survival of the core outdoor business which has the potential to become a strong succesful retailer.”