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The Original Factory Shop reveals CVA proposals

The Original Factory Shop (TOFS) is set to close 32 of its 224 stores after its parent company Duke Street launched a Company Voluntary Arrangement (CVA).

Private equity firm Duke Street has negotiated a cash injection of £10m to help alleviate pressure on the business.

Documents show that Duke Street will also write off its subirdinated debt, which stood at approximately £15m as part of the deal.

The new funds have been agreed with lenders and are subject to an overhaul of the business to cut costs.

Duke Street had previously stated that it didn’t see the TOFS business as viable in its current form. The business had revenues of £190m, up 3.1% year on year forthe year to 30 April 2017. 

Gross profits rose to £85.5m from £83.5m. However, operating profit fell from £8.1m to £4.4m and profit before tax fell from £6.3m to £4.3m as a result of stock impairment.

Earlier this month Drapers revealed that Euler Hermes had withdrawn credit insurance cover for suppliers to the chain. 

Creditors are due to meet on July 9 to decide whether to back the proposals.

 

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