Creditors of troubled high street chain BHS will vote today on whether to accept its proposed company voluntary arrangement (CVA), which seeks rent reductions of up to 75% on a number of stores.
Earlier this morning, Allan Lockhart, property director of New River Retail, which owns 32 shopping centres, including The Ridings in Wakefield where BHS is a tenant, told Radio 4’s Today programme he would vote in favour of the CVA.
He said the rent from BHS represented a very small percentage of New River’s overall income and the inclusion of a break clause in the terms of the arrangement meant that, further along the line, if the tenant continued to underperform, it could be replaced.
However, last week Hermes Investment Management, which owns shopping centres in Tunbridge Wells and Milton Keynes, both of which are home to BHS stores, expressed concerns about the proposals. Meanwhile on Monday of this week, it was reported that BHS’s biggest creditor, the Pension Protection Fund, plans to abstain from the vote.
One BHS supplier told Drapers he felt obliged to support the CVA: “If we don’t support them, then they’ll go into administration. If we do then we’ll lose money. We have no option.”
BHS has submitted proposals to the High Court that ask landlords of 40 loss-making stores to cut rents by 75%. It is seeking a 20% or 50% reduction on a further 47 units. BHS has 164 stores in total. The terms of the CVA drawn up by BHS’s adviser, KPMG, require the approval of 75% of BHS creditors.
BHS has warned it will likely enter administration if it does not gain enough support for the plan. In this case, unsecured creditors could receive just 1.23p in the pound.